I would finish by drawing a distinction between assets that are priced to perfection and those that have a margin of safety built into what can be viewed as historically cheap valuations.
Solely investing in traditional assets is a game that is long in the tooth and has grave risks of not providing protection or diversification from unforeseen events.
We advocate protection through both cheaper valuations but also portfolio construction that involves dynamic asset allocation and owning a much broader swathe of assets than has traditionally been the norm.
Rory McPherson is head of investment strategy at Psigma
Key points
There has been nowhere to hide in recent months using traditional assets, with bonds selling off at the same time as equities.
The bumper returns investors have enjoyed by just owning a simple 60/40 mix (with 60 being the percentage in equities) cannot go on forever.
Infrastructure is a theme that can benefit from helpful policy.
