Investing Amid Low Expected Returns: Making the Most When Markets Offer the Least

Elevate your game in the face of challenging market conditions with this eye-opening guide to portfolio management
Investing Amid Low Expected Returns: Making the Most When Markets Offer the Least provides an evidence-based blueprint for successful investing when decades of market tailwinds are turning into headwinds.
For a generation, falling yields and soaring asset prices have boosted realized returns. However, this past windfall leaves retirement savers and investors now facing the prospect of record-low future expected returns. Emphasizing this pressing challenge, the book highlights the role that timeless investment practices – discipline, humility, and patience – will play in enabling investment success. It then assesses current investor practices and the body of empirical evidence to illuminate the building blocks for improving long-run returns in today’s environment and beyond. It concludes by reviewing how to put them together through effective portfolio construction, risk management, and cost control practices.
In this book, readers will also find: The common investor responses so far to the low expected return challenge Extensive empirical evidence on the critical ingredients of an effective portfolio: major asset class premia, illiquidity premia, style premia, and alpha Discussions of the pros and cons of illiquid investments, factor investing, ESG investing, risk mitigation strategies, and market timing Coverage of the whole top-down investment process – throughout the book endorsing humility in tactical forecasting and boldness in diversification
Ideal for institutional and active individual investors, Investing Amid Low Expected Returns is a timeless resource that enables investing with serenity even in harsher financial conditions.
From the Inside Flap
In Investing Amid Low Expected Returns: Making the Most When Markets Offer the Least, renowned institutional investor advisor Dr. Antti Ilmanen delivers a timeless—and timely—treatment of strategic investment processes in times of low returns.
The author outlines the low expected return challenge now facing investors due to the past four-decade stretch that has seen markets with ever-increasing valuations and realized returns with falling yields. Assuming high realized returns will persist, especially in an era of low starting yields, is therefore complacent.
The key building blocks to improving long-run returns—including major asset class premia, illiquidity premia, style premia, and the always elusive alpha—are discussed as well, with extensive empirical evidence used to bolster the book’s exploration of the most reliable sources of investment returns.
Readers will learn how to construct an efficient portfolio from these building blocks as well as how to manage risk and control costs, informed by detailed descriptions of competing investment models and best practices amongst large institutional asset owners.
Perennial investing topics are explored at length, with fulsome discussions of the pros and cons of liquid vs. illiquid investments, active vs. passive management, as well as the merits of factor investing, ESG investing, macro-resilient portfolios, and tail hedging. Humble forecasting and bold diversification are emphasized throughout the book, as is the need for a combination of good investments with a patient approach.
With a foreword by Cliff Asness, managing and founding principal at AQR Capital Management, Investing Amid Low Expected Returns is a can’t-miss resource for institutional investors and active individual investors seeking an authoritative and eye-opening treatment of intelligent investing principles in the context of diminishing returns.
From the Back Cover
PRAISE FOR Investing Amid Low Expected Returns
“Call it secular stagnation, low neutral rates or hyper liquidity, we are in a very different interest rate era than most of us grew up in. Few, if any, financial questions are more important than what it all means