Invesco
The lack of vitality in some traditionally relied-upon assets is a growing concern for institutional investors. Forced to challenge themselves and look for innovative answers to meeting their return needs, investors are examining each piece of their specific investment puzzle and considering how it might be customized to achieve their goals. Customization as a trend has merged, in one notable example, with a redefinition of “barbelling,” a strategy familiar to most investors in which portfolio construction focuses roughly half of allocations on short-term tactical investments and the remaining half on longer-term assets.
With the long end of the reconceived barbell pursuing alpha via illiquidity premiums in private markets, the more immediate and tactical end might be considered the beta portion of a barbell strategy – an area where investors have become comfortable with indexing. With the investing landscape as complex as ever, index investments are considered a fairly reliable source of beta that don’t require much effort and tinkering. As is the case with almost everything else in today’s investment environment, however, the status quo is under scrutiny.