By including SLS’s to your portfolio, risk-adjusted returns should improve and overall portfolio volatility risk will be reduced with the addition of a non-correlated asset class to your asset allocation.
The traditional stock and bond asset allocation methodology is no longer a balanced approach. As interest rates remain suppressed, insufficient returns from fixed-income investments have negatively distorted the risk premium attached to the traditional model.
In the chase for safe yield, SLS Strategies can reduce overall portfolio volatility and stabilize returns:
- Market dislocations and regulatory pressures create opportunities to diversify into non-traditional alternative sectors
- SLS Strategies may offer better relative return performance with lower correlation to financial markets
- Investors stand to harvest the benefits of an illiquidity premium for the portion of their assets allocated to SLS Strategies that would otherwise be allocated to fixed income investments
A well-constructed portfolio, diversified with SLS Strategies, can provide attractive returns and reduce downside risk while offering a desirable investment hedge, inflation protection and lower overall portfolio volatility.
