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 fair
Invesco
Institutional investors have become accustomed to low yield in some areas of fixed income they have historically depended upon. This is hardly news, and Invesco’s 2021 Long-Term Capital Market Assumptions anticipates that yields are likely to stay low. This expectation and investors’ need to meet return objectives in a challenging environment are driving a trend of investment “barbelling,” a not-so-new concept that has been reconsidered, reimagined, and recast to face the challenges confronted by today’s institutional investors.
The barbell concept – a portfolio construction that focuses roughly half of allocations on near-term tactical investments and the remaining half on longer-term assets – is familiar to most investors, but effectively implementing this approach is not as simple as the visual image it calls to mind. It requires substantial investment expertise and resources, but it’s a hot topic at the moment because it allows for tremendous flexibility