We think investors need to rethink long-term portfolio construction. Why?
First, long-term macro anchors that were central to building long-term portfolios for decades – like stable growth, contained inflation expectations and fiscal discipline – are adrift as the world undergoes a transformation. Second, today’s investment opportunity set has broadened, with the emergence of brand new assets - such as bitcoin - or more granular exposures, such as thematic equities, that together offer a much richer range of granularity than historic asset allocation blocks can provide. Assets historically labelled as "alternative" - from hedge funds to infrastructure - can be thought of as part of a core allocation in this modern definition of a neutral multi-asset portfolio.
In our Rethinking neutral series, we consider what a new “neutral” long-term portfolio looks like. Our first report focuses on hedge funds – and why we believe some investors could carve out more room for hedge fund strategies in portfolios. Our second report focuses on infrastructure and how mega forces are driving enduring infrastructure demand. Our third report rethinks portfolio construction in the age of transformation.
Read how we’re rethinking long-term portfolio construction
Rethinking portfolio construction
In a world with may possible outcomes, the “average” scenario is no guide for portfolios. See the “Monitoring scenarios is key” chart. Yet traditional asset allocation — built around static mixes like a 60/40 stock-bond split — assumes a stable long-term environment. That assumption is misaligned with an economy transforming in real time.
We believe portfolio construction must adapt. That means revisiting key allocation decisions more frequently, incorporating explicit alternative scenarios, focusing on underlying economic drivers rather than asset class buckets, and treating alpha as integral to asset allocation — not an add-on.
The mega forces driving the transformation cut across asset class buckets. The AI buildout, for example, spans surging capital spend, data centers, power generation, infrastructure and private markets. That means what appears diversified on paper may in practice represent a concentrated bet on how transformation unfolds.
It means there is no “easy” long-term portfolio in an era of structural change. But retreating to static allocations or traditional approaches risks missing the opportunity transformation creates. In our view, the greater risk today is inertia.
Monitoring scenarios is key
Illustrative distribution of U.S. equity returns
Forward-looking estimates may not come to pass. Source: BlackRock Investment Institute, February 2026. Note: The illustration shows a hypothetical distribution of U.S. equity returns in the different scenarios underlying our capital market assumptions. Read more here.