Case
Studies
A PRACTITIONER'S GUIDE: Prudent Participation
Considering adding alternatives to help build more resilient portfolios doesn’t require an overhaul.
A Better Way to Invest in Commodities
Commodities can be a powerful asset class to incorporate into the classic stock/bond portfolio mix, but they are prone to extended periods of flat returns and sharp crashes that correlate with broader risk-off events. In this paper we present a systematic framework for minimizing these unwanted effects, creating a commodity strategy that offers both superior returns and diversification when compared to holding a simple long-only basket of diversified commodities.
High Income in a Yield-Starved World: Efficiently Harvesting the Equity Volatility Premium
In the US and around the world, populations are aging and people are living longer, heightening demand for income generating investment strategies. Yet as need continues to increase, key sources of income remain inadequate. The 10-year treasury yield was under 1% for the majority of 2020, while hovering between 1.3% and 1.6% the majority of 2021. And at approximately 1.3%, the S&P 500 dividend yield is currently a full 3 percentage points or some 70 percent below its historical mean.
Head, Shoulders, Knees, and…Tails? How Passive Investing is Changing the Structure of Markets
The growth of passive investment strategies has had measurable effects on the structure of equity markets, creating both risks and opportunities. The solution is to construct portfolios capable of exploiting the phenomenon of passive investing using convex strategies – a solution that received a boost from recent regulatory changes.
A Portfolio Guide to Equity + Convexity
When asset allocators build portfolios with specific goals and capital market forecasts, the efficacy of the portfolio can be limited, and potentially completely hamstrung, with an incomplete set of investable assets to choose from. This is why Simplify has introduced a new asset class, called Equity + Convexity, that can help allocators more efficiently tackle the most pressing issues facing portfolios today. In this paper we review a general framework for deploying Equity + Convexity in portfolios and the most common use cases today for the new asset class.
Managing Portfolio Risk in a Low Rate Environment
Investment portfolios are built around equities given their attractive expected returns and bonds are then layered into portfolios to help diversify risk. But when bond yields are as low as they are today, the expected cost of holding bonds relative to equities can rise substantially, which brings into question whether they still fit the bill as the go-to choice for diversifying equity-dominated portfolios.
