Smarter Diversification, Without the Trade-Offs: Why Return Stacking Changes the Game

In a market where shocks can hit from any angle, investors need more than a balanced portfolio—they need resilience. But here’s the catch: real diversification often means stepping away from what feels safe. That’s where many investors get stuck.

ReSolve Asset Management’s CEO, Mike Philbrick, joined Pierre Daillie on a special episode¹ of Raise Your Average to unpack a solution that sidesteps the usual pain of portfolio diversification—without sacrificing what investors already know and trust. The strategy? Return Stacking.

What Exactly Is Systematic Macro?

“Systematic macro strategies are about data-driven, rules-based investing across many global markets,” says Philbrick. “They scan hundreds of assets—equities, bonds, currencies, commodities—and use quantitative signals to identify trends, value gaps, carry trades, volatility opportunities, and more.”

Think of it as a globally aware, algorithmic engine that can go long or short, depending on what’s happening out there. These strategies don’t try to predict the market with gut instinct—they adjust in real time, staying responsive across changing environments.

In short: they don’t just sail with the tide—they adjust the sails constantly.

The Fragile 60/40

Most portfolios still rely on a traditional 60/40 stock-bond mix. And while that model worked for decades, cracks are starting to show—especially when both stocks and bonds fall at the same time.

“2022 was a classic example,” Philbrick notes. “Stocks and bonds were both down nearly 20%. That negative correlation we’ve relied on since the 1980s broke down. And when that happens, your entire portfolio takes a hit.”

Systematic macro strategies help patch that hole. Why? Because they behave differently. “They’ve historically had low correlation to stocks and bonds—and in periods like stagflation, they’ve tended to do well,” he explains.

The Problem with Traditional Diversification

The typical fix? Sell off some stocks and bonds to make room for alternatives—often something like a 50/30/20 mix.

Smart in theory. Risky in practice.

“Investors get nervous when the alternatives underperform,” Philbrick says. “Like in 2024—stocks were up 24%, but macro strategies only returned around 6–8%. Suddenly, that diversification feels like a mistake. And people abandon it at the worst possible time.”

It’s not a performance issue—it’s a behavioral one.

Enter Return Stacking: No More Funding Trade-Offs

So what if you didn’t have to sell your core holdings to get diversification?

“Return stacking solves the funding dilemma,” Philbrick says. “Instead of taking away from stocks and bonds, we stack the systematic macro strategy on top—using capital-efficient instruments like futures.”

That’s what ReSolve’s Canadian ETF, RGBM, is designed to do. It blends 50% global equities and 50% Canadian bonds—and then layers a systematic macro strategy on top. One dollar in, two dollars of exposure out.

It’s like keeping your full plate—and adding dessert.

How to Use RGBM in a Portfolio

Let’s say you’re managing a classic 60/40 portfolio.

“Instead of shifting to a 50/30/20 allocation—which cuts your equity and bond exposure—sell 10% of your equities and 10% of your bonds, and replace that 20% with RGBM,” Philbrick suggests.

Here’s the magic: that 20% allocation to RGBM puts the equities and bonds right back into your portfolio, and then adds the macro strategy on top. Your original 60/40 is intact—but now with a new 20% return engine riding above it.

What do you end up with? 60/40/20—yes, that’s correct—60% Equities, 40% Bonds, and 20% Systematic Macro.

You’ve kept what you trust—and stacked on something powerful.

What’s the Payoff?

This isn’t just about smoothing volatility. It’s also about the potential to outperform.

“All the macro strategy has to do is beat the cost of financing,” Philbrick explained. “We’d expect it to generate 4–6% above that over time.”

And you’re not relying on picking the right stock or market. “You’re stacking on top of beta—on top of the performance you’re already going to get from traditional exposures,” he said.

As Daillie puts it, “Instead of hoping your stock picks outperform, you’re layering in a return stream that’s completely uncorrelated to what you already hold. That means in a bad year for bonds or equities—or both—macro could help soften the blow.”

Philbrick nods: “Exactly. It’s more tools in the toolkit. It’s not about beating the market—it’s about building a better engine.”

When It Feels Like Cheating

In fact, many institutional investors describe return stacking as their “cheat code.”

“It just feels like cheating,” Philbrick laughs. “You keep everything you know, love and trust—then add something that can help in tough times and build more robust returns over time.”

That’s the power of capital efficiency. That’s what RGBM offers.

Bottom Line? Return stacking lets you hold onto your 60/40—and bolt a return-seeking strategy on top. It’s diversification without sacrifice. Smart risk without behavioral drag. As Philbrick put it: “It works over time, not all the time—but when it works, it can really matter.”

Explore More: Dive deeper into RGBM and return stacking strategies at returnstackedetfs.ca.

Footnotes:

1 AdvisorAnalyst. "Outsmart the 60/40 Trap: How Return Stacking Changes the Game.", 7 July 2025,