Return Stacking: Strategies for Overcoming a Low Return Environment

Return Stacking
Strategies for Overcoming a Low Return Environment

IN THIS REPORT

  • Stretched valuations in equities and fixed income imply depressed returns and higher potential volatility for traditional portfolios.
  • Reaching for yield or increasing exposure to pro-cyclical assets may help compensate for low expected returns, but can increase portfolio risk.
  • Reducing exposure to equities and bonds to accommodate non-correlated assets or alternative strategies may reduce risk, but at the expense of lower potential returns and painful tracking error.
  • We introduce a novel investment concept, accessible to all investors, which is designed to seek higher returns with less risk and low tracking error by using new products which, in combination, can provide more than $1 of exposure for every dollar invested.
  • The proposed solution harnesses the full potential of traditional portfolios plus the opportunity for higher returns and risk reduction from non-correlated investments.
  • This capital efficiency allows for the introduction of non-correlated return streams that stack on top of core portfolio exposures.
  • We show how to maximize “Return Stacking” opportunities by choosing alternative fund managers already engaging in capital efficient strategies.
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Rodrigo Gordillo
Rodrigo Gordillo
Rodrigo is President & Portfolio Manager of ReSolve Asset Management SEZC and has over 15 years of experience in investment management. He has co-authored the book Adaptive Asset Allocation: Dynamic Global Portfolios to Profit in Good Times – and Bad (Wiley) as well several whitepapers and research focused on adding new insights to the quantitative global asset allocation space. Rodrigo began his career on the institutional side with John Hancock before transitioning to the ultra-high net worth space at a boutique wealth management firm. Subsequently, Rodrigo continued to evolve his quantitatively focused investment methodology as Portfolio Managers at Macquarie Canada and Dundee Goodman Private Wealth before launching ReSolve Asset Management Inc in 2015 and ReSolve Asset Management SEZC in 2020. Specialties: Long/Short Quantitative Investment Strategies , Risk Parity, Adaptive Asset Allocation, Global Tactical Asset Allocation , Portfolio Optimization.

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