ALO16: Beyond 60-40... A Bold Approach to Asset Allocation ft. Troy Gayeski
Top Traders Unplugged
Introduction
The chapter discusses the implications of inflation expectations and the 'higher for longer' regime on yield curves and gold fixed income. It also introduces Troy Gayeski, Chief Market Strategist at FS Investments.
Troy Gayeski, Chief Market Strategist for FS Investments, joins us today to discuss asset allocation and investment opportunities in today’s higher yield environment. We discuss how higher interests rates are impacting the risk and reward across capital markets and why higher interest rates mean equity valuations may be stretched at the current juncture. We discuss how asset allocation has evolved from the 60-40 benchmark to a 40-30-30 allocation for many institutional investors with a 30% allocation to alternatives. We delve into where Troy sees opportunities within alternatives particularly in real estate, private equity, secondaries and liquid alternatives given his view that we are late in the economic cycle.
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Episode TimeStamps:
02:44 - Introduction to Troy Gayeski
11:36 - A top-down macro perspective
19:43 - The state of the 60/40 portfolio
26:37 - How do investors react to the interest rate?
30:47 - Analyzing the alt space
35:50 - Advice for allocating to real estate
40:00 - An overweight of privates?
44:02 - A mockdown in valuations - an unfolding process or mostly done?
46:30 - Opportunities and positioning in the liquid space
52:42 - Building a diversified liquid alts portfolio
55:09 - Is old school global macro still viable?
57:15 - Troy's perspective on AI tools
01:00:25 - Advice for other investors
01:02:54 - Thanks for listening
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