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Our latest thinking on macroeconomic events and their impact on your portfolio construction.
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2020 outlook
Access the latest macro view from BII.

Don't lose sight of Strategic Asset Allocation

2 min video

While unprecedented monetary and fiscal policy coordination is making space for a more constructive environment, significant drawdowns in risky assets have occurred this year, driven by fear around the economic cost of the coronavirus outbreak. For many, there is belief that markets and the macro environment have fundamentally changed. This means that future asset behaviours underpinning asset allocation design will need to be re-assessed and that significant changes in the previously implemented asset allocation are needed.

Market volatility will likely remain heightened for some time, impacting risk-budgeting and potentially warranting a redesign of portfolio allocations. The state of the world we will end up in will have profound implications not only on returns and risks, but also on correlations across asset classes, therefore impacting key portfolio construction concepts such as diversification.

Our Portfolio Consultants are working with a number of investors across Europe in helping to review and evaluate existing portfolios, in light of both revised expected returns, as well as testing portfolios under a series of different market driven scenarios.

Portfolio construction in extraordinary times

Q2 2020 Implementation Guide
Key market themes to reflect the unfolding coronavirus outbreak and its economic impact.
Learn more about multi-asset investing at BlackRock
Discover how investors are making changes to their strategic asset allocations.

Redesigning portfolios sustainably

Sustainability: from tactical adoption to portfolio transformation

The conventional view assumes that sustainability can be ignored: green assets will return less, and non-green assets will have a risk premium and thus higher returns. We believe that is not only wrong but the opposite is true.”

Jean Boivin, PhD, Managing Director, Head of the BlackRock Investment Institute (BII)
 Quotation mark

Sustainable investing is gradually moving from a satellite strategy to a fundamental consideration in the portfolio construction and investment process. But transforming your portfolio goes beyond substituting selected products with sustainability ones, and requires investors to embed sustainability considerations at the heart of the portfolio asset allocation design phase.

Up to now, few investors have been empowered to do so given complexities of estimating future asset class and exposure risk and returns for ‘classic strategies’ vs. ESG ones.

In our view, adapting investment processes to incorporate ESG factors when setting overall ESG portfolio objectives will be essential to success in the future. Access practical resources below to help integrate sustainability in portfolios.

Stay sustainable

Sustainability: The tectonic shift transforming investing
A framework for incorporating sustainable investing in portfolio construction
Case study: turning a multi-asset portfolio sustainable
Case study showing how sustainability can be fully integrated into portfolios
Indexing for sustainable portfolios
Why Sustainable investing starts with indexing.

Key impacts will be:

Evolution in how managers generate alpha in fixed income sleeves within multi-asset propositions. Cost-effective and precise index strategies will become more frequently used as a way to express asset allocation and factor views in portfolios where the manager wants to own such choices; alpha-seeking strategies will continue to dominate the preferences for investors who see their unique selling point in other areas, and choose to outsource such crucial choices to a trusted partner.
An expansion in the availability of fixed income investment tools. This will be as a result of the growing demand and progress in data quality and availability and risk and investment management technologies, particularly in the indexing space where more granularity of exposures will become available.
Continued evolution of alpha-seeking strategies, as greater availability of benchmarks empowers enhanced use of ETFs as a tool to express active choices.
Aladdin by BlackRock
Uncertain times demand more clarity. More than portfolio management software, Aladdin® is an end-to-end operating system for investment professionals to see their whole portfolio, understand risk exposure, and act with precision. Through Aladdin, BlackRock is committed to helping clients navigate volatility and market uncertainty.
How can we help?
From case studies, bespoke portfolio consultations to asset allocation decisions, explore the ways BlackRock can help you find the right solution for your portfolio. Discover the ways in which we can help.