ALO16: Beyond 60-40... A Bold Approach to Asset Allocation ft. Troy Gayeski
Top Traders Unplugged
Niels Kaastrup-Larsen
4.8 • 670 Ratings
🗓️ 11 October 2023
⏱️ 64 minutes
🧾️ Download transcript
Summary
Troy Gayeski, Chief Market Strategist for FS Investments, joins us today to discuss asset allocation and investment opportunities in today’s higher yield environment. We discuss how higher interests rates are impacting the risk and reward across capital markets and why higher interest rates mean equity valuations may be stretched at the current juncture. We discuss how asset allocation has evolved from the 60-40 benchmark to a 40-30-30 allocation for many institutional investors with a 30% allocation to alternatives. We delve into where Troy sees opportunities within alternatives particularly in real estate, private equity, secondaries and liquid alternatives given his view that we are late in the economic cycle.
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Episode TimeStamps:
02:44 - Introduction to Troy Gayeski
11:36 - A top-down macro perspective
19:43 - The state of the 60/40 portfolio
26:37 - How do investors react to the interest rate?
30:47 - Analyzing the alt space
35:50 - Advice for allocating to real estate
40:00 - An overweight of privates?
44:02 - A mockdown in valuations - an unfolding process or mostly done?
46:30 - Opportunities and positioning in the liquid space
52:42 - Building a diversified liquid alts portfolio
55:09 - Is old...
Transcript
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| 0:00.0 | So one way or the other, curse are going to steep it. |
| 0:10.0 | In the mini banking crisis that we had, it was a bull steeper. |
| 0:16.0 | The last six weeks it's been a bare steeper, right? |
| 0:18.0 | Because inflation expectations have become more elevated and |
| 0:21.3 | the higher for longer regime is being priced into global fixed income. So we think there's |
| 0:26.4 | tremendous risk reward there, and that's an area that we've traded around quite substantially. |
| 0:31.4 | Again, it's not speculating on duration. It's just saying the probability of the yield curve |
| 0:37.1 | steepening is excessively high, |
| 0:39.8 | and you're at some of the most extreme levels of inversion in history other than the 70s or early 80s. |
| 0:46.6 | Imagine spending an hour with the world's greatest traders. Imagine learning from their experiences, |
| 0:52.7 | their successes, and their failures. |
| 0:55.0 | Imagine no more. |
| 0:56.9 | Welcome to Top Traders Unplugged, the place where you can learn from the best hedge fund managers in the world, |
| 1:03.0 | so you can take your manager due diligence or investment career to the next level. |
| 1:07.7 | Before we begin today's conversation, remember to keep two things in mind. All the |
| 1:12.0 | discussion we'll have about investment performance is about the past, and past performance does |
| 1:16.6 | not guarantee or even infer anything about future performance. Also understand that there's a |
| 1:21.6 | significant risk of financial loss with all investment strategies, and you need to request and |
| 1:26.3 | understand the specific risks from |
| 1:28.3 | the investment manager about their product before you make investment decisions. |
| 1:32.5 | Here's your host, veteran hedge fund manager, Nealz Kostrup Larson. |
| 1:40.9 | For me, the best part of my podcasting journey has been the opportunity to speak to a huge range |
... |
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