Core Portfolios and Capital Efficiency

schwartzfinal
Global Head of Research
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06/01/2021

On Behind the Markets, a podcast brought to you by Jeremy Schwartz, WisdomTree Global Head of Research, we talk to market strategists, business executives and financial advisors about important trends underpinning the financial markets. 

In this episode, Jeremy talks to Corey Hoffstein, Co-Founder and Chief Investment Officer at Newfound Research.

Listeners will hear about:

  • How expected returns have shifted over the past 30 years, what that means for finding portfolio diversifiers, and the risk levels inherent to achieving different investment objectives. 
  • How Corey’s investment strategies shifted after his research concluded that the dominating market force is a pro-cyclical liquidity cascade that reinforces sharp market moves in both positive and negative directions.
  • Trends underpinning passive investing and what that means for momentum strategies.
  • Why he considers capital efficient investment strategies an important element of portfolio construction, and what type of strategies make natural complements to a capital efficient core. 
    • Spoiler Alert: In Corey’s view, gold and managed futures strategies focused on commodities are perfect examples of what complements an efficient core, particularly in today’s macro environment.
  • What type of strategies can help manage volatility
  • We also talked about how liquidity cascades propagate in the cryptocurrency markets, and how crypto assets are particularly vulnerable to liquidation cascades given the decentralized nature of their trading and exchanges. 

You can listen to our full conversation with Corey Hoffstein below. 

Important Risks Related to this Article

Risks related to NTSX, NTSE and NTSI:

While the Funds are actively managed, their investment processes are expected to be heavily dependent on quantitative models and the models may not perform as intended. Equity securities, such as common stocks, are subject to market, economic and business risks that may cause their prices to fluctuate. The Funds invest in derivatives to gain exposure to U.S. Treasuries. The return on a derivative instrument may not correlate with the return of its underlying reference asset. The Funds’ use of derivatives will give rise to leverage. Derivatives can be volatile and may be less liquid than other securities. As a result, the value of an investment in the Funds may change quickly and without warning and you may lose money. Interest rate risk is the risk that fixed income securities, and financial instruments related to fixed income securities, will decline in value because of an increase in interest rates and changes to other factors, such as perception of an issuer’s creditworthiness.

Additional Risks Specific to NTSI:

Investments in non-U.S. securities involve political, regulatory and economic risks that may not be present in U.S. securities. For example, foreign securities may be subject to risk of loss due to foreign currency fluctuations, political or economic instability, or geographic events that adversely impact issuers of foreign securities.

Additional risks specific to NTSE:

Investments in non-U.S. securities involve political, regulatory and economic risks that may not be present in U.S. securities. For example, foreign securities may be subject to risk of loss due to foreign currency fluctuations, political or economic instability, or geographic events that adversely impact issuers of foreign securities. Investments in securities and instruments traded in developing or emerging markets, or that provide exposure to such securities or markets, can involve additional risks relating to political, economic or regulatory conditions not associated with investments in U.S. securities and instruments or investments in more developed international markets.

Please read each Fund’s prospectus for specific details regarding the Fund’s risk profile.  

 

Related Blogs

An Update to Cliff Asness’s Study on the Benefits of a Levered 60/40

Solving the Portfolio Paradox: WisdomTree’s Efficient Core Funds

Related Funds

WisdomTree Emerging Markets Efficient Core Fund

WisdomTree International Efficient Core Fund

WisdomTree U.S. Efficient Core Fund

For more investing insights, check out our Economic & Market Outlook

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About the Contributor
schwartzfinal
Global Head of Research
Follow Jeremy Schwartz
Jeremy Schwartz has served as our Global Head of Research since November 2018 and leads WisdomTree’s investment strategy team in the construction of WisdomTree’s equity indexes, quantitative active strategies and multi-asset model portfolios. Mr. Schwartz joined WisdomTree in May 2005 as a Senior Analyst, adding to his responsibilities in February 2007 as Deputy Director of Research and thereafter, from October 2008 to October 2018, as Director of Research. Prior to joining WisdomTree, he was head research assistant for Professor Jeremy Siegel and helped with the research and writing of Stocks for the Long Run and The Future for Investors. Mr. Schwartz also is co-author of the Financial Analysts Journal paper, What Happened to the Original Stocks in the S&P 500? He received his B.S. in Economics from The Wharton School of the University of Pennsylvania and hosts the Wharton Business Radio program Behind the Markets on SiriusXM 132. Mr. Schwartz is also a member of the CFA Society of Philadelphia.