Asset Allocation
Private Markets are entering a new phase as TPA and Evergreen funds expand. Shifts in access, implementation, and market leadership will have important implications for institutions, Wealth Management, and future Private Equity returns.
MacroQuant sees downside risks to stocks over a long-term horizon but is not yet saying that we are at imminent risk of an equity bear market.
We revamp several of our methodologies in this edition of our return assumptions. We estimate that a US 60/40 portfolio will return 6.1% over the next 10 years. This is slightly below the return assumptions for US pension funds. Investors can obtain better returns by diversifying internationally and to alternative assets.
In our Beta report, we introduce a new framework for thinking about long-term investing in a multipolar world: The Garrison State. Investors need to shed their outdated view that geopolitical risks are... a risk. History teaches us that pressure makes diamonds. And geopolitical pressure makes Garrison States, which tend to outperform precisely because by definition, the bevy of risks that surrounds them is existential.
MacroQuant is recommending that equity investors keep their finger near the eject button but avoid pressing it for now. The model is warming up to the dollar again and sees scope for oil prices to rise.
