A multi-alternative investment portfolio with at least 20% of non-mainstream assets can outperform a traditional 65/35 portfolio, according to a study by Singapore sovereign wealth fund GIC Pte Ltd and J.P. Morgan Asset Management.
The study uses 4.5% as a benchmark real return for a portfolio comprising 65% global equities and 35% global bonds, and says this return is doubtful because of “challenging opportunities for alpha and diversification in traditional assets”.
“The 65/35 global equities/fixed income portfolio is unlikely to achieve a 4.5% real return on a long-term basis; however, adding 20% or more of multi-alts to it can make this target attainable,” according to the paper released on September 23.
It notes that alternative investments have become an essential component of investment portfolios, but that accessing quality data remains a significant hurdle, resulting in persistent market inefficiencies.
“These inefficiencies, together with significant dispersion in returns across asset classes and among managers, present opportunities for skilled allocators to generate alpha by taking advantage of information asymmetries.”
According to GIC’s latest annual report, the wealth fund allocated 51% of total assets to equities, 26% to bonds 26% and 23% to real assets as of end-March 2025.
GIC doesn’t publicly disclose its asset data, which the Sovereign Wealth Fund Institute pegs at around US$847 billion as of March 2024.
