If it’s Broke, Fix it: Rethinking the Classic 60/40 Allocation Strategy by Using Volatility as an Asset Class
IBKR Podcasts
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Creating Volatility as an Asset Class
The idea came out of the crisis in 2008. I was speaking with investors and they were really speaking with a singular voice. They had these actuarial assumptions for their asset allocations, which were frankly just not being met. The default return for an equity asset is usually approximately 7%. However, equities really never return 7%. That downside volatility can become a real problem because you don't have the time to earn your way out of that.
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