Portfolio Construction for Future Investments

This guide outlines the evolving landscape of portfolio construction, emphasizing the integration of private market investments alongside traditional public market allocations. It discusses the limitations of conventional portfolio strategies, particularly the traditional 60/40 stocks and bonds model, which has faced challenges due to increased market volatility and changing economic conditions since 2020. The document highlights the growing significance of private markets, which now represent a substantial opportunity for enhanced returns and diversification. It notes that a significant percentage of companies with substantial revenues remain private longer, thus presenting unique investment opportunities. The guide also addresses the importance of adapting portfolio construction practices to incorporate private market allocations effectively, considering liquidity needs and risk management. Furthermore, it introduces the European Long-Term Investment Fund (ELTIF) as a regulatory framework designed to facilitate access to private market investments, thereby broadening the investment opportunities available to wealth investors.