How is the Market Environment Evolving?
  Low Expected Returns   Volatily Fertilizer
Government Bonds
In the last 20 years Developed Market government bond yields averaged 3.6% versus the current 1.1%1
Corporate sector
Tighter credit spreads despite a deterioration in corporate leverage
Equity Market
Long run bull market:
S&P 500 has recorded a 186% return since February 20092
1 A rise in global debt of $57 trillion since Q4 2007 to Q2 20143
2 Global growth rate set to halve from 4% in 2010-20 to 2.3% in 2041-504
3 Central banks excess of liquidity: almost $10trn since 20085
4 Market liquidity is drying up due to tighter regulations
An Approach to Meeting
Investor's Needs
Build a robust portfolio
Focus on
among risk
Seek to enhance portfolio returns
Enlarge universe Focus on alpha6 Enhance behavioral skills
Broaden investment universe by adding allocation in the liquid alternatives space Maximize the number of investment ideas by exploiting all possible alpha opportunities Ability to identify potentially winning ideas through cognitive discipline
Help to protect portfolios
Identify alternative macro scenarios Analyze impact/
stress test
Identify portfolio hedging strategies
How can we diversify differently?
Effective Diversification by
Budgeting Risk Across Four Strategies:
Macro Strategy

Reflect the base case scenario, i.e. a manager's "View of the World"
Macro Hedging

Hedging helps to protect against risks associated with the Macro Strategy
Low correlated, relative value or intra-market alpha strategies

Satellite Strategy
Alpha generation through selecting the most attractive securities

Selection Strategy


Important Information

  1. Source: Bloomberg. Twenty year and current average bond yield figures calculated using US, Eurozone, Japanese and UK 10-year government bond yields. Data as of February 27, 2015.
  2. Source: Bloomberg, data as of February 27, 2015.
  3. Source: Haver Analytics; National Sources; World EconomicOutlook, IMF, BIS, Mckinsey Global Institute Analysis. 2Q14 data for advanced economies and China; 4Q13 data for other developing economies.
  4. Source: World Bank, Pioneer Investments, February 27, 2015.
  5. Source: BoE, FRB, BoJ, ECB, PBC, SAFE, Haver Analytics, Deutsche Bank Research, February 2015.
  6. Alpha - Measures risk-adjusted performance, representing excess return relative to the return of the benchmark.

Multi-Asset Investing
Diversify, Different

Matteo Germano
Global Head of Multi-Asset Investments