Improving Returns

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How Can I Potentially Improve My Long-Term Returns?

Diversifiers offer a number of potential benefits, including lower correlations and higher risk-adjusted returns. For instance, investors who allocate 20% of their portfolios to diversifiers have the potential to not only lower the volatility of the overall portfolio, but also may increase the possible return of the portfolio over time.

As the chart shows, a traditional portfolio plus diversifiers historically has offered higher returns and lower risk than a model portfolio that doesn’t include diversifiers, based on historical 10-year median returns.

Source: Goldman Sachs Asset Management/Strategic Advisory Solutions Portfolio Strategy. Median returns and volatilities are the 50^th percentile of returns and volatilities over 10-year rolling periods from January 1, 2001 to December 31, 2018. Past performance does not guarantee future results, which may vary.

Historically speaking, a range of asset classes have delivered more attractive long-term returns than US large-cap equities. We believe lower correlation and volatility can work in tandem to provide diversification and risk management.

Portfolio Strategy

Learn about why portfolio construction matters and how practical tools can help.

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Goal: Increasing Income

In today’s environment of exceptionally low interest rates, finding 4% yield from traditional asset classes such as core bonds and core equities may be more difficult than ever.

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Goal: Reducing Uncertainty

Given investors’ understandable desire for loss avoidance, we believe alternative strategies’ potential impact on portfolio risk and returns are worth understanding.

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