current
Renewed Portfolio Resilience
Investors are seeking portfolio resilience through income generation, inflation hedges, and options strategies to manage risk in a volatile macroeconomic environment.
Timeframe
near-term
Categories
Detailed Analysis
The need for portfolio resilience is paramount in the face of increased macroeconomic volatility. The document suggests three key approaches: focusing on income, adding inflation hedges, and using options strategies. "To protect the recent surge in household wealth and manage increased macroeconomic volatility, clients need resilient portfolios." This includes increasing allocation to income-generating assets like dividend-paying equities and illiquid investments, adding real assets like real estate and commodities, and utilizing options to reconfigure risk and return profiles.
Context Signals
U.S. household net worth has reached record levels, prompting a reassessment of portfolio strategies.
Declining cash and Treasury bill yields are pushing investors to seek new sources of income.
The positive correlation between stocks and bonds during recent inflation spikes highlights the need for diversification beyond traditional assets.
Edge
Illiquid investments in private markets could offer attractive income opportunities and diversification benefits.
Active management in fixed income may become more important for managing interest rate and credit risk.
Options strategies can provide downside protection and enhance returns in a volatile market environment.
