Atlantic House

The flip in the negative correlation between bonds and equities has revealed that the protections investors took for granted were based entirely on assumption. Now they need to diversify their diversification.

True diversification means owning assets that are truly uncorrelated. But that fact hasn’t stopped big investors from piling into the private markets while pretending that the Fed Put can protect their public portfolios.

How do investors stay on top of diversification and maintain adequate levels of non-correlation when markets oscillate with every breath and asset relationships are as fickle as they are malleable?

The private markets have surged in popularity as investors hunt for a potent combination of yield and downside protection. But in a big selloff, the strategy that will do best is one that’s genuinely uncorrelated.