ReSolve’s Riffs on Leverage over Beverages: The Risk/Reward of Vol Targeting

This episode discussed:

Most pension plans and other institutional investors with long-term liabilities are faced with an enormous mismatch between the return assumptions in their actuarial models and the combination of sky-high equity valuations and rock-bottom bond yields. Some have chosen to address their funding gaps by adding leverage to their portfolios. Topics of this include:

• Different types of leverage – Implicit vs explicit, recourse vs non-recourse
• Hidden leverage in private investments
• Volatility targeting – pro-cyclical vs counter-cyclical
• Leverages towards concentrated vs diversified investments and market fragility

The conversation was greatly enhanced by a series of questions from our friend Mike Green (Logica Capital) – who we hope will join us in the coming weeks. Special thanks to Mike and others that have participated with their questions.

Thanks for watching and see you next week.