Joining us to talk about how liquid alternatives and real assets are integral to diversifying portfolios against today’s inflation and rising rates are Jeff Evans and Travis Wetsch from TD Asset Management.
2022 has been a challenging year so far for most investors. Falling stock and bond prices are taking a toll on investors, marking perhaps the abrupt end to a 40-year period of gains in the bond market like no other, and rates of inflation and inflation growth not seen since 1983.
With correlations in stocks and bonds climbing to 100% this year, it’s been challenging, at the very least to find much of a diversification punch among traditional assets. BUT, liquid alternatives are reminding us that diversification is out there if you are willing to look into some of the more-complex, and often actively managed, parts of the ETF ecosystem.
Rising inflation, tightening of monetary policy in the form of rising interest rates, ongoing post-pandemic supply shocks which are the result of disruption of global supply chains, and War in Ukraine have highlighted the fact that investors need to begin to seek alternative investment return streams that do not correlate or have structurally low correlations to the equity/bond portfolios made popular during the last 4 decades.
Since 2019, Liquid alternative investments as well as real assets have become readily available to retail investors in the form of ETFs and Funds that trade on a daily basis. So, we’ve now had in and around three years plus of experience and two major market downturns, the Spring of 2020 and the first three quarters of 2022, for investors to draw from, to understand and see how newly available liquid alternative investments are delivering on their intended value proposition, and, how they can playing an effective role in diversifying portfolios for better outcomes against market volatility, economic and interest rate risk.
Please enjoy our conversation!
Highlights
• What are you seeing in the markets today and how have things evolved over the course of 2022?
• What has been TD Asset Management’s experience with Alts and Real Assets through numerous market cycles?
• How can portfolios benefit from Liquid Alts? What are the greatest weaknesses of today’s popular investment portfolios?
• In the context of portfolio construction – how can advisors or investors integrate alts and real assets into model portfolios to hedge against volatility and inflation?
• Lots of similarities between Infrastructure and Real Estate. What are the key differences?
• Please explain the significant divergence between public and private asset classes which makes the public ETF quite attractive today.
• How do you manage these unique strategies? Fundamental? Quantitative?
• How do liquid alternatives like like infrastructure and real estate fit into existing model portfolios?
=================
About our guests
=================
Jeff Evans, CFA is Vice President and Director of Quantitative Research and Risk Management. He focuses on factor analysis and quantitative risk assessment for the TD Active Global Infrastructure Equity ETF, TD Active Global Real Estate Equity ETF and Greystone funds. He is Co-Lead Portfolio Manager for the TD Global Active Real Estate Equity Strategy and the TD Active Global Infrastructure Equity Strategy. Jeff designed the first equity exchange traded fund offerings for one of the major Canadian banks.
Travis Wetsch, CFA is Lead Portfolio Manager for the TD Active Global Real Estate Equity ETF and is the Global Real Estate Sector Analyst responsible for U.S. and International Equity strategies. His career began in 1997, and he joined TDAM in 2003. Travis holds a B. Admin. from the University of Regina. He has organized fundraising campaigns for Camp Circle O’ Friends and the Chris Knox Foundation.