Powerful structural forces are reshaping the world as we know it. Capturing the opportunities resulting from structural trends, and managing the risks emerging from them can only be achieved through a Total Portfolio Approach.

A static fixed income allocation was built for a world that no longer exists. The price-insensitive central-bank buyer that suppressed volatility and kept bonds negatively correlated to equities has disappeared at a time when inflation and fiscal sustainability risks are at the forefront of investors’ minds. This new regime demands an unconstrained, absolute-return approach – absolute return fixed income is the diversification prize. However, absolute return strategies can differ substantially in flexibility and exposures. A factor-based framework can help investors understand which characteristics to look for when assessing these strategies.

Markets have narrowed sharply around a single theme: AI hardware bottlenecks, amplified by the launch of AI agents and scaled-up capex plans. Concentration and single-theme exuberance typically precede a durable broadening, with value dispersion narrowing and the style outperforming even as industry outcomes widen through disruption. Markets are at a turning point where the valuation extremes are set to unwind, and the next cycle’s winners will look very different from previous decades. Allocators seeking diversification and protection should rebalance toward fundamental value in global equity portfolios.

Many of the traditional sources of diversification – including bonds, private markets and hedge funds – have become increasingly caught up in the same market forces. This makes alternative risk premia crucial in portfolios.

Traditional strategic allocation frameworks may be too static for a macro backdrop that continues to evolve. Connecting macro signals to portfolio construction helps manage changing risks and opportunities and build portfolios with greater confidence and consistency.

Every active portfolio holds two bets: selection, which is measured, and sizing, which is merely asserted. Decades of evidence show naive equal weighting is remarkably hard to beat.

With some sectors of the private credit market facing rising redemptions, liquidity scrutiny and weakening confidence, concentrating portfolios in a narrow, illiquid slice of the market is hard to justify – especially when private credit is only ~10% of Australia’s ~$2.2 trillion credit universe. The challenge is no longer accessing income, but generating it without sacrificing diversification, liquidity or flexibility, and higher income need not mean a shift into illiquid strategies. A multi-sector approach offers a credit opportunity set ~10x larger than private credit, daily liquidity instead of quarterly gates, and diversified relative value across every sector – capturing similar yield without concentrating risk in one illiquid slice.

Portfolio construction must evolve to reflect a structurally different world. Traditional diversification assumptions and portfolio frameworks which may not fully capture the risks to which portfolios are actually exposed - or take advantage of emerging asset class opportunities that the structurally different world is exposing.
How can practitioners construct multi-asset, multi-manager investment (MAMMI) portfolios which are greater than the sum of their parts and improve the financial wellbeing of individuals?

Fundamental active equity allocations should be shorter term, tactical, alpha seeking allocations and/or focused on alpha generating strategies that help to reduce overall portfolio risk.

Portfolio construction is moving beyond asset-class labels and deliberately selecting the exposures that matter most. Many of the most important portfolio decisions are no longer being made in traditional core allocations, but in the targeted exposures investors choose to build around them.

Decades of evidence show that the average active manager underperforms the market after fees. Systematic active-extension strategies have historically outperformed traditional long-only active managers by significant margins.

In a world of structural change, geopolitical uncertainty and technological disruption, traditional portfolio diversifiers are no longer delivering the outcomes investors expect. Bonds offer both lower income and less diversification than they have provided historically. Australian institutional senior secured lending combines consistent income, low volatility, low correlation to traditional asset classes and capital preservation through security, covenants and strong lender protections. For investors seeking to keep their "eyes on the prize" of long-term investor financial wellbeing, the focus should be on building more resilient portfolios by substituting traditional bond allocations with a growing allocation to Australian institutional senior secured lending, as a source of consistent income, capital stability and diversification.

The forces of innovation and disruption, and changes in investors’ discount rates, drive significant rotations in markets. A corporate life cycle approach provides a balanced global equity core portfolio that can perform through changing markets.

Many investors continue to classify Global Listed Infrastructure as a satellite or alternative allocation only – despite its resilience and earnings growth outlook becoming stronger and more durable. Rising power demand, energy security and mobility are supporting sustained growth for monopolistic assets providing essential services and networks that underpin economies. While infrastructure retains defensive characteristics, its role in portfolios has evolved beyond diversification and downside protection. Investors who cling to outdated asset class classifications risk overlooking Global Listed Infrastructure – an asset class capable of combining inflation protection, income and structural growth – which is worthy of a larger, core allocation in portfolios through an investor’s lifecycle.

Portfolio construction must evolve to reflect a structurally different world. Traditional diversification assumptions and portfolio frameworks which may not fully capture the risks to which portfolios are actually exposed - or take advantage of emerging asset class opportunities that the structurally different world is exposing.
How can practitioners construct multi-asset, multi-manager investment (MAMMI) portfolios which are greater than the sum of their parts and improve the financial wellbeing of individuals?

As investors navigate a new market regime, maintaining eyes on the prize means preserving investment objectives. Asset Based Finance is a powerful portfolio diversifier and a differentiated source of income, complimenting traditional direct lending.

Conventional wisdom holds that fixed income exists to protect investors when equities fall. That protection rests on a reliable negative correlation between bonds and equities and was supported by a decades-long bull market in bonds, both of which have broken down since the Covid19 pandemic. With the diversification prize no longer guaranteed, the case for holding bonds must rest on something more durable. Keeping eyes on the prize means owning fixed income for the return it generates, rather than the insurance it once provided. The implication for portfolio construction is a shift toward strategies built for income generation, capital stability, and liquidity, positioning fixed income as a reliable source of return in its own right, rather than a mere hedge when another asset class falls.

Portfolios built for the world of the last several decades are not necessarily going to win the prize in the one decade ahead, as fiscal, AI and geopolitical forces reshape the macro-outlook in ways that are hard to predict. What is predictable is that real assets with the right characteristics are strategically important for an investment portfolio regardless of which way these forces break. Global listed infrastructure is the ultimate real asset. It offers the key characteristics allocators seek through structural growth, inflation protection and defensive income qualities rooted in essential services. These characteristics, not a label or a bucket, are what earn listed infrastructure its place in a well-constructed portfolio.

Conflict, strategic competition, defence spending, energy insecurity and supply-chain redesign are impacting inflation, fiscal policy, interest rates, currencies and cross-asset correlations. Growing our knowledge of what drives geopolitics dramatically improves our ability to identify and understand the related economic risks that are impacting investment markets, to ensure that geopolitical resilience is baked into portfolios.

This session first considered how practitioners can apply multi-lens analysis via AI to decide their key takeouts and next steps from Strategies Summit 2026. Then, our Practitioner Panel discussed which high conviction thesis they heard at Strategies Summit they would investigate further, why, and how.