00:00 Speaker A

You say that the typical 60/40 portfolio allocation, it’s just not working right now. So, what should investors be doing instead?

00:09 Brad

Good morning, Brad. It’s great to be with you.

00:14 Brad

We are seeing the 60/40 behave somewhat the way it did in 2022 and that’s not very useful for investors. Uh, we have not believed the 60/40 was the right strategic asset allocation for a long time. There’s a lot more available than simple stocks and bonds these days. And we have been building portfolios using some combination of traditional assets and ETFs, but also including things like buffered ETFs that protect on the downside and, uh, private market, uh, vehicles like private credit, uh, to build what we think are more resilient portfolios.

01:50 Speaker A

And so, with that in mind, what is perhaps a different type of, we like general numbers, right? That’s why 60/40 perhaps has has done well for a while and that balancing, but also it’s easy to remember. So what is the different type of perhaps percentage positioning that investors should be keeping in mind?

02:31 Brad

It obviously varies by investor, right? Younger people can take on more long-term risk than some of our older, closer to retirement or in retirement clients. Uh, but we think, you know, 50/20/20, 50/25/25, uh, or even a 60/20/20, something that gets, um, less correlated investments in the portfolio, and that again could be a mix. We’re taking some of our equity exposure and using buffered ETFs to give us protection on the downside while allowing participation in the upside. And then bringing in things like, uh, private equity secondaries, which we think, uh, have a tailwind, particularly with endowments like Harvard and Yale, uh, getting rid of some of their private equity exposure. That’s going to wind up in the secondary markets, and we think there’ll be some interesting opportunities.

04:37 Speaker A

Interesting. And so, as we’re thinking about what has transpired over the month of April, I mean, it has been a wild one for investors to track here, and in some of your notes here, really talking about liberation day and the tariff tantrum, a lot of investors are just trying to figure out what’s next. Will there be once we finally see some of the negotiations start to really solidify any type of clarity around what a deal could look like on many different fronts for all of the countries that are impacted, and then additionally, how company fundamentals receive a little bit more clarity on the back half of that as well. You know, what are you anticipating as the kind of what comes next critical moment here that investors are waiting for?

05:53 Brad

It’s interesting because the tariff tantrum brought, uh, record setting levels of volatility both up and down. Uh, and just last week on Thursday, uh, there was a lot of, uh, ink spilled, uh, in journalistic terms about a Zweig breadth thrust, which is a signal that perhaps the market has bottomed. And nothing would make us happier than to see stocks, you know, go northeast from here. Um, but we’re concerned that the impact of the tariffs, uh, really hasn’t been seen yet in earnings. Uh, there are a lot of signs to suggest that, you know, if we’re not in a recession, we’re certainly going to see some recessionary outcomes from the tariffs. So, uh, we think it’s a time to take a breath, um, not be overextended in the markets, let things play out a little while longer before we take any strong positions one direction or the other.