Given that investment risk and returns for institutional asset owners will depend on strategic portfolio allocation decisions, what are the optimal strategies for constructing and evaluating portfolios?
- Many asset classes, and the multi-asset portfolios constructed with those assets, exhibit non-normal return distributions.
- Challenges to constructing strategic portfolios fall into two major categories:
- What forecast inputs to use and
- Understanding the various quantitative approaches and their inherent strengths and weaknesses.
- One means to help manage higher dimensional risk in strategic portfolios is to a defensive equity allocation to hedge against those risks. We evaluate the impact of using PGIM Quantitative Solutions’ US Market Participation Strategy.
- To reach realistic assumptions in building strategic portfolios, forward-looking expectations based on initial conditions in the current environment must be incorporated.