Mike Philbrick's Top Picks: October 1, 2021

Top picks from Mike Philbrick, chief executive officer, ReSolve Asset Management

Mike Philbrick, chief executive officer, ReSolve Asset Management

FOCUS: Exchange-traded funds

MARKET OUTLOOK:

Stretched valuations in many stock and bond markets are challenging investor’s advisors and allocators to look farther afield to meet investor return targets. Many investors find themselves recommending portfolios that are uncomfortably far out along the risk curve, stretching for higher yields and increasing pro-cyclical asset exposure via asset classes like private equity, bank loans and exposure to high yield bond markets.

In addition to this there is increasing risk that the low correlation between stocks and government bonds is beginning to shift and in turn reduce the densification benefit to risk adjusted investors have enjoyed over the last 30 years in the ubiquitous 60-40 stock-bond portfolio.

Thoughtful investors, advisor and allocators are evolving their approach by replacing some of there stock and/or bond exposure with uncorrelated asset classes and alternative strategies as liquid alternative strategies have become more widely available to investors.