Institutional investors including sovereign wealth funds, endowments, and family offices have long relied on alternative investments to navigate uncertainty. Now, with equities and bonds more correlated than ever, moving in the same direction 80% of the time, the question isn’t if you should diversify into alternatives, it’s how.
In our latest episode of CIO Chatroom, Grace Tam, Chief Investment Adviser, Hong Kong speaks with two experts on how to allocate assets like institutional investors at the forefront of private markets and hedge fund strategies:
■ Erin Yam, Head of Greater China, Blackstone Private Wealth, who explains why private equity and credit offer stronger returns with lower volatility-and how megatrends like AI and power infrastructure are creating unprecedented opportunities.
■ Karen Cheng, Head of Sales, North Asia, Jupiter Asset Management, who reveals how market-neutral systematic strategies can deliver favourable returns-even in downturns (like +8.3% in 2022, when equities and bonds both fell).
Read our latest Investment Navigator (April 2026 Edition) to learn more about our latest CIO views and asset allocation strategies.
Private markets add diversification and income that are less tied to public equities and bonds. Over the past thirty years equities and bonds moved together in about 80% of years, so alternatives can improve returns and reduce risk. Private equity and private credit have historically posted higher returns with lower volatility, and many institutional investors now use them as core parts of diversified portfolios.
A market‑neutral systematic strategy seeks to generate a cash‑plus‑5 % return by maintaining equal long and short positions, thereby eliminating market risk, and by using data‑driven mathematical models to select the stocks. Its low correlation with traditional assets can add diversification, potentially boosting returns while reducing portfolio volatility.
AI and Power are the megatrends, and investors can tap them via private equity funds that own data centres, AI infrastructure, HVAC, energy software and power assets such as renewables, storage, transmission and gas generation. These private‑market vehicles provide direct exposure to the growth drivers in both sectors.
The market neutral strategy returned about 11.3% per year over the past five years and rose 8.3% in 2022 while equities and bonds fell sharply. It posted positive results in roughly 74% of months when global markets were down, demonstrating its value as an uncorrelated diversifier.
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