Adaptive Asset Allocation: A Different Way to “Manage Futures”

By most measures U.S. stocks and global bonds have pushed well into high valuation territory, which has preceded periods of very-low prospective returns in the past. For investors to achieve the same results as they achieved over the past 10 years in the next decade, we will have to experience a third major bubble in a row.

As a result, we believe that investors with material quasi-passive allocations to U.S. equities and global fixed income are going to be disappointed with their returns over the next decade or so. We aren’t alone with this view; there is broad consensus across many credible sources, including AQR, Research Affiliates, and others, that traditional portfolios may produce insufficient returns.

To address these shortcomings, we advocate a portfolio framework that emphasizes global scope while maximizing diversification across asset classes, macro factors and alternative premia. This solution offers a greater likelihood of producing the returns investors need, with less risk than they would be taking with a traditional approach. Resolve Asset Management designed the Adaptive Asset Allocation concept to deliver on this vision.

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Adam Butler, CFA, CAIA
Adam Butler, CFA, CAIA
Adam Butler is Chief Investment Officer of ReSolve Asset Management, sub-advisor to an alternative allocation strategy at Rational Funds. He manages ETF and futures based strategies including a global risk parity ETF, two Adaptive Asset Allocation funds, and a multi-strategy hedge fund. Adam is also author of the book Adaptive Asset Allocation: Dynamic Global Portfolios to Profit in Good Times and is ranked in the top 1% of authors by paper downloads on SSRN. He has authored over a dozen papers and dozens of articles on asset allocation; factor investing; quantitative methods; and portfolio optimization. Adam holds both CFA and CAIA charters and appears on BNN Bloomberg and CNBC.

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