Lesson 1Investment-grade credit: credit selection, spread sensitivity, yield pickup vs default riskThis section examines investment-grade credit as a core income asset, focusing on issuer selection, spread and rate sensitivity, default and downgrade risk, and how to size positions to enhance yield without undermining portfolio resilience.
Credit spread drivers and term structureBottom-up issuer and sector selectionDefault, downgrade, and recovery analysisInterest-rate risk and spread durationPosition sizing and diversification rulesLesson 2Guidelines for sizing cash and cash equivalents: buffer sizing, opportunity cost, and real yield considerationsThis section provides guidelines for sizing cash and cash equivalents, balancing liquidity needs, opportunity cost, and real yield, and distinguishing between operational cash, strategic dry powder, and collateral requirements.
Operational, strategic, and collateral cashLiquidity buffers and spending policiesOpportunity cost and cash drag analysisReal yield, inflation, and policy ratesInstruments: T-bills, MMFs, and depositsLesson 3Constructing a 100% target allocation example with clear percentage rationale across the five required bucketsThis section walks through building a full 100% strategic allocation, assigning target weights to cash, bonds, credit, equities, and alternatives, and explaining the rationale using risk, return, and constraint-based perspectives.
Defining investable buckets and constraintsTranslating objectives into target weightsIllustrative 100% allocation across bucketsChecking risk, drawdown, and liquidityDocumenting rationale and review cadenceLesson 4Framework to set long-term target weights: liability matching, risk budgeting, and return-seeking bucketsThis section presents a framework for setting long-term target weights, linking liability profiles, risk budgets, and return-seeking buckets, and showing how to integrate regulatory, accounting, and stakeholder constraints.
Mapping liabilities and time horizonsDefining total portfolio risk budgetReturn-seeking vs liability-hedging bucketsRegulatory, accounting, and rating limitsIterative optimization and governanceLesson 5Government bond allocation: duration choice, country mix, inflation-linked bonds, and role in risk-off periodsThis section covers government bond roles in portfolios, including duration and curve positioning, country and currency choices, inflation-linked bonds, and how sovereigns behave in risk-off episodes and different monetary policy regimes.
Core vs satellite sovereign exposuresDuration targets and curve positioningCountry, currency, and credit quality mixInflation-linked bonds and breakeven analysisRisk-off behavior and crisis performanceLesson 6Principles for conservative institutional allocation in volatile markets (capital preservation, diversification, liquidity)This section sets principles for conservative institutional portfolios in volatile markets, emphasizing capital preservation, diversification across risk drivers, liquidity management, and governance practices that support disciplined rebalancing.
Capital preservation and drawdown limitsDiversification by asset and risk factorLiquidity tiers and redemption planningRebalancing rules and governanceStress testing and scenario analysisLesson 7Alternatives allocation: real assets (REITs, infrastructure), commodities (gold, energy), hedge strategies (managed futures, long/short equity) and private markets considerations for long horizonThis section details alternatives as diversifiers and return sources, covering real assets, commodities, hedge fund-like strategies, and private markets, with emphasis on liquidity, valuation, and suitability for long-horizon investors.
Real assets: REITs and infrastructure rolesCommodities: gold, energy, and inflation hedgingManaged futures and crisis alpha strategiesEquity long/short and relative value approachesPrivate markets, illiquidity, and pacingLesson 8Asset bucket definitions and investment roles: cash, gov’t bonds, investment-grade credit, equities, alternativesThis section defines key asset buckets—cash, government bonds, investment-grade credit, equities, and alternatives—and clarifies their primary roles, risk drivers, and interactions within a diversified strategic allocation.
Cash: liquidity and capital stabilityGovernment bonds: safety and durationInvestment-grade credit: income and spreadEquities: growth and equity risk premiumAlternatives: diversification and alphaLesson 9Equity allocation: regional and style splits (US vs ex-US, value vs quality vs dividend), role for low-volatility and defensive sectorsThis section analyzes equity allocation design, including regional splits, style tilts such as value, quality, and dividend, and the role of low-volatility and defensive sectors in stabilizing returns during market stress.
Regional splits: US, developed ex-US, EMValue, quality, and dividend style tiltsLow-volatility and minimum-variance toolsDefensive sectors and cyclicals balanceImplementation via funds and mandates
