How to navigate a market regime that is increasingly outgrowing the traditional 60/40 framework

Recently, we hosted a lunch presentation in Lugano where Emmanuel Hauptmann, CIO & Head of Systematic, and Hasan Aslan, Senior Portfolio Manager, explored how to navigate a market regime that is increasingly outgrowing the traditional 60/40 framework.

As inflation makes stock/bond decorrelation less reliable, we discussed how our European Market Neutral and Emerging Markets Equities strategies can provide diversification to modern portfolios.

Key Takeaways from the Discussion:

Beyond the 60/40 Playbook: With traditional diversification under pressure, liquid alternatives, such as our European Market Neutral Equity strategy, offer uncorrelated sources of return. Focusing on relative-value and low-beta approaches helps decouple portfolio performance from broad market volatility.

Emerging Markets - Beyond Concentration: While Developed Markets grapple with heavy concentration, EM offer a compelling landscape of higher-quality stock opportunities. With extraordinary AI CAPEX now pressuring free cash flow in the West, quality companies in EM exhibit resilience with higher free-cash-flow yield levels. 

The Dispersion Advantage: We have entered a higher-dispersion regime where fundamentals and bottom-up selection matter more than ever. Geopolitical uncertainty and tightening liquidity continue to reward disciplined capital allocation.

Liquidity as a Differentiator: Amidst growing concerns over private market valuations, liquid alternative strategies are increasingly prioritised for their role in enhancing portfolio liquidity and risk control.

In an era of elevated valuations, the broad market approach is being replaced by a focus on selectivity and risk control.

A huge thank you to all those who attended and joined the discussion!