Multi-asset or diversified growth strategies have emerged as an ideal investment solution with a goal to deliver equity-like returns with lower volatility. At First Quadrant, our multi-asset solutions seek to offer a better approach to traditional 60/40 (equities/bonds) or diversified growth investments using innovative portfolio construction techniques, including risk parity, smarter beta and tail-risk management, as well as First Quadrant’s proprietary Market Risk Index to dynamically shift the portfolio according to the current market risk environment. Our strategies are offered in the form of absolute return strategies designed to deliver positive long-term returns irrespective of market direction, alternative beta strategies which utilize non-traditional methods such as risk-based and risk-factor approaches to garner excess return, and in the form of total return solutions which aim to deliver attractive risk-adjusted returns.
- Long/short equities
Long/short equity investments are designed to predict both outperformance as well as underperformance, and when combined with a well-designed investment process can improve upon typical long-only mandates. The goal is to create a substantial increase in gross active exposure, distribute risk more evenly and maximize the ability to short stocks in order to magnify and capture value from underweight positions. First Quadrant’s long/short strategies build upon our experience managing equities since 1990 and long/short strategies since 1991. Our work in long/short equities offers new life to the asset class as well as the potential for enhanced risk-adjusted returns. Our long/short equities can also be implemented utilizing innovative portfolio construction techniques aimed at minimizing drawdowns.
- Risk-balanced commodities
Commodities are a truly unique asset class. In a long-only context, they are notable for their diversifying effect on more conventional portfolios of stocks and bonds, as well as for hedging unexpected inflation and providing exposure to global growth. First Quadrant’s risk-balanced commodities approach was created to provide greater diversification properties than traditional long-only commodity indices. Risk from rapid price movement in a particular commodity can potentially be mitigated by balancing risk between two or more commodities within a sector. First Quadrant’s approach spreads risk between the commodity sectors to achieve a balanced exposure to the different inflationary drivers, namely economic growth, food inflation, and currency inflation.
Ask us about our alternative approaches to enhancing your returns and growth engines.