A 60/40 portfolio isn’t 60/40 risk.
It’s closer to 90/10.

Most people I speak with don’t realize how concentrated their portfolio’s risk actually is.

If 60% of your portfolio is invested in stocks, that doesn’t mean stocks account for only 60% of the risk.

Stocks are significantly more volatile than bonds and have experienced deep, multi-year drawdowns throughout history. As a result, they tend to dominate the overall risk of a traditional portfolio.

That’s why looking at capital allocation alone can be misleading.

Building a more resilient portfolio isn’t just about owning more investments.

It’s about owning more independent sources of return.

That can include investments like:

• Private credit
• Infrastructure
• Certain real estate strategies
• Market-neutral and other low-beta hedge fund strategies
• Select private equity opportunities

Of those, some hedge fund strategies can be among the most powerful diversifiers because they can be designed to have little or even no exposure to the stock market (“beta”).

That’s why I think they’re one of the most misunderstood asset classes.

When thoughtfully combined with traditional investments, uncorrelated return streams can:

• Reduce overall portfolio volatility
• Help mitigate sequence-of-returns risk
• Keep capital compounding when one asset class struggles