This note outlines an outlook for the asset management industry rooted in our view of the macro investment environment, which suggests that asset owners may need to reexamine their strategic allocations. A higher equilibrium level of inflation, high valuation multiples and less available diversification are not bearish per se, but they do prompt a need to change portfolio design, with the need to protect long-term purchasing power at its heart.
We see an increased role for investing in an explicitly multi-asset context, in part responding to needs of asset owners, but also reflecting a structural change in the pattern of capital raising in the contemporary economy. This shift raises the level of allocation to private assets in portfolios. A further example is a need to redesign allocations for pension plans in response to greater longevity and a reduced role for bonds as diversifiers.
An outlook of lower asset-class returns means that persistent sources of alpha need to play a greater role in allocation.
We also think that innovation, e.g., in the form of tokenization of real assets, is an important step toward incorporating diversifying return streams without compromising liquidity. Ultimately, this evolution subverts the notion of asset classes.
You can now read the full whitepaper at the link below
