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A total portfolio approach: The hunt for alternative sources of diversification

A total portfolio approach: The hunt for alternative sources of diversification

September 29, 2026 Fixed income, Currency

“Investors are increasingly exploring a broader range of approaches that aim to provide differentiated sources of return and diversification, improve portfolio robustness and reduce dependence on traditional market beta.”

Why investors are rethinking portfolio construction

For decades, portfolio construction was built around a simple idea: equities drive long-term growth while government bonds provide diversification during periods of market stress. Recent years have challenged that assumption. Inflation shocks have demonstrated that equities and bonds can fall together, exposing the risks of relying on a single source of diversification.

As investors adapt to this new environment, attention is increasingly shifting towards a total portfolio approach (TPA). Rather than allocating capital according to traditional asset class buckets, a total portfolio approach assesses investments based on how they contribute to overall portfolio objectives, whether by enhancing return potential, improving resilience, or strengthening diversification.

This paper explores five investment strategies that we believe deserve greater attention from investors seeking alternative sources of diversification.

Together, these strategies may help investors diversify across a broader range of return drivers, reduce reliance on traditional market beta and improve portfolio resilience.

A total portfolio approach seeks to combine complementary strategies that respond differently to economic and market environments. The paper highlights how combining alternative return sources can potentially:

  • Improve diversification
  • Reduce portfolio drawdowns
  • Enhance risk-adjusted returns
  • Improve recovery following market shocks
  • Strengthen long-term investment outcomes

Read the full whitepaper to explore how a total portfolio approach can help investors as they seek to identify alternative sources of diversification, improve portfolio resilience and position portfolios for a wider range of future market outcomes.

 

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