Defensive Alpha: credit‑lens equity hedging

Niels and Alan sit down with BlackRock’s Jeff Rosenberg to examine how the post Covid shift from too little to too much inflation is reshaping portfolios. Jeff explains why bond and equity correlations have changed, why fixed income is drifting back toward income rather than pure diversification, and how fiscal pressure and soft financial repression may influence rates. They explore what systematic really means at BlackRock, from trend ETFs and defensive alpha to market breadth and execution. The conversation ends with the rise of liquid alternatives, whole portfolio thinking and growing equity concentration risk.

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Episode Timestamps:

00:00 - Introduction, Jeff’s role at BlackRock Systematic and setting the agenda

04:09 - From too little to too much inflation and the end of divine coincidence

09:32 - Wage dynamics, “prices are too high” and persistent, not resurgent, inflation

14:48 - Bond equity correlation, the changing role of fixed income and income versus diversification

19:55 - Fiscal dominance, debt loads and the risk of soft financial repression

25:21 - What “systematic” means at BlackRock across beta, factors and pure alpha

30:44 - Trend as a systematic return stream and why BlackRock entered the ETF trend space

35:58 - Breadth, capacity and why market selection matters more than cocoa

41:12 - Defensive alpha explained using a credit lens on equities and crisis behaviour

46:27 - Execution, implementation alpha and using BlackRock’s liquidity river

51:39 - Constraints of wrappers, leverage limits and designing strategies for ETFs

56:54 - Growth of liquid alternatives, 50 30 20 and replacing the old 60 40 mindset

01:02:10 - Equity concentration, big tech, AI and the need for uncorrelated return streams

01:07:32 - Whole portfolio thinking, total portfolio approach and final takeaways

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