To deal with these challenges, traders face an ordinary menu of choices (Exhibit 1). To enhance the tradeoff between threat and return in portfolios, they’ll reallocate to asset lessons offering higher risk-adjusted returns, decrease correlations, or a little bit of each. Lately, for instance, sure traders have elevated their allocations to options, together with illiquid personal property like personal fairness and actual property. Though this has been a profitable strategy, all these autos usually are not out there to many particular person traders.
