Rethinking Asset Allocation
Why Innovation Deserves A Strategic Allocation in Investor Portfolios
In the current yield-starved environment, ARK believes it is important for investors and allocators to find new pockets of opportunity for their customized portfolios. Growth-oriented investors with long-term time horizons often find it difficult to balance between growth and volatility. When faced with economic, geopolitical, and technological uncertainty, however, they often adopt creative strategies after transitioning through periods of skepticism, research, and acceptance. Emerging market allocations serve as an important example of such a transition. While “out of the box” or “non-traditional” investment strategies may seem to demand “high conviction” at first blush, they can evolve into viable and important sources of return.
In this paper, ARK identifies problems associated with traditional “style boxes” in both asset allocation and portfolio management. Similar to that for emerging markets, we then detail why innovation deserves a strategic allocation in global equity portfolios.