two pieces which are look we need to stay strategically
invested in productive assets at the core of
our portfolio in those world class forever stocks.
We need to provide ballast and income
through active allocations to fixed income.
But we're not done there.
By no means does it mean that we should set it and
forget it like the traditional set of 6040 portfolio.
Both of those first two pieces are
actively managed and can be changed.
And on top of that,
we want to stay nimble and we want to invest
tactically along the perimeter of our portfolio
strategic at the core tactical at the perimeter.
What do I mean by that?
Well,
one example of that is we can go back to 2022 Mario where when
we saw treasury yields the interest rates at near all time lows.
And
we believed
and also credit spreads.
So the spread of risky investments over
those perceived to be safe investments
was very narrow.
And we felt like it was it was highly likely that
interest rates were going up and pretend there was a
decent potential that default rates were going up.
That is not a period that you want to be invested in fixed income.
So we believe very deeply that investing is seasonal.
Our
allocation to bonds went to zero across our main strategies.
And that resulted in material relative outperformance.
We had some questions from clients,
Mario, about why we were sitting in cash.
But that proved to be the prudent thing.
In fact,
just thinking about a safe investment,
if you were to buy a 30-year U.S.
treasury
back in that end of 2021 yielding 1.7%,
you would have lost more than half
your value of that perceived to be safe
security as the 30-year U.S.
went from 1.7% yields to 5% yields.
So avoiding those losses is key.
So you need to be tactical and nimble for part of your portfolio.
