Quants pitch strategies for when bonds no longer work
Investors are flocking to alternative diversifiers of equity risk
For institutional investors, the language of diversification is changing.
The classic 60/40 rule and voguish ‘all weather’ portfolios of alternative risk premia are giving way to less familiar terms: statistical hedging, outcome-oriented strategies and the defensive frontier.
This is how quants describe strategies designed to replace bonds as a diversifier in portfolios. The common goal is to offset growing exposure to equity risk but without the negative carry of costly derivatives hedges.
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