Market volatility, inflation, and positive correlations across assets have put the diversifying nature of

multi-asset portfolios in question.

We feel that going into next year, there's a good chance that 60-40 portfolios remain volatile and you're not getting necessarily back to the type of regime we've been accustomed to in the last 20 years where such a strategy was a relatively robust way to essentially construct a portfolio.

I'm also Nathan and this colleague Christian Miller Glistman. should keep in mind when building portfolios.

I'm sitting down with my colleague Christian Miller Glistman,

who heads Asset Allocation Research within Portfolio Strategy.

Christian, welcome back to the program.

Thanks for having me again.

So let's start with a review of 2022.

We've seen sharply higher interest rate yields

and a leadership change in sectors

as the high growth tech sector underperformed and energy and commodity sectors took the lead.

So give us an overview of how assets and investment styles have performed this year.

Yeah, it's been a remarkably difficult year. I think you had very few assets do really well up until recently where you had a bit of relief and it was really down to starting point with everything being expensive at the beginning of the year and why

was everything expensive?

It's because you had real yields.

So the bond yield after inflation last year turned deeply negative, boosting valuations across assets and I think a lot of that reversed

You had a sharp increase in real yields that weighed on most assets, but in particular as you said on long duration assets so tech stocks

growth stocks did really poorly fang the famous acronym I think one of the

worst performing group of stocks but also assets like

Bitcoin and crypto that have a certain amount of duration and correlation with these

type of areas have done really poorly and the trigger of course of these rising real yields was a lot related to inflation and the inflation shock that further accelerated with the Russia Ukraine invasion and that really boosted commodities.

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