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From the Classic 60/40 Portfolio to the 40/30/30 Strategy: It Is the Moment for Alternatives

60/40 to 40/30/30 strategy — Pixabay CC0 Public Domain

For decades, the famous 60/40 portfolio, which allocates investments with 60% in stocks and 40% in bonds, was considered the standard model of diversification for conservative and moderate investors. But times have changed, and with them, the fundamentals that supported this strategy. A recent report published by Candriam questions the current effectiveness of this traditional model in the face of an economic landscape marked by volatile inflation, persistently high interest rates, and growing geopolitical tensions. In addition, it highlights the relevance of including alternative assets in portfolios.

Although stocks performed well in 2023 and 2024, driven by moderating inflation, future expectations are more modest. Interest rates continue to constrain equity valuations, while bonds continue to offer reduced returns and less protective capacity. The consequence: the breakdown of the balance that made the 60/40 model a reliable option to face adverse scenarios.

The study underscores that despite its strong historical performance over the past two and a half decades, the risk profile of the 60/40 has generated serious concerns. A nominally allocated portfolio in this proportion has shown a correlation close to 1 with the equity market, which in practice makes it a reflection of stock behavior. This means that in times of crisis, such as in 2008 or during the market collapse due to the pandemic in 2020, the 60/40 did not offer the protection many expected. For most investors, losses exceeding 30% are not acceptable, which raises the urgency to review the model and seek additional, more resilient sources of diversification.

The document, signed by Johann Mauchand, Pieter-Jan Inghelbrecht, and Steeve Brument, proposes a new formula to restore diversification and improve the risk-return profile of portfolios: the 40/30/30 strategy, which includes alternative assets as a third key component.

Increasing Portfolio Resilience: The 40/30/30 Approach
For Candriam, the answer lies in diversifying beyond traditional instruments. The proposal: to replace 30% of a 60/40 portfolio with alternative assets, using the Credit Suisse Hedge Fund Index as a reference. The result, according to the historical analysis, is compelling: higher returns, lower volatility, and better downside protection.

The new 40/30/30 portfolio, composed of 40% stocks, 30% bonds, and 30% alternatives, showed a 40% improvement in its Sharpe ratio, a metric that assesses risk-adjusted returns. Even using a passive index-based allocation, the benefits were significant.

Charting a New Direction
Candriam’s study warns about a crucial aspect that many investors overlook: not all alternative assets are the same, nor do they behave in the same way under different market conditions.

Using broad indices as a reference is useful as a starting point, but it also highlights a structural challenge: the universe of hedge funds and alternative strategies is immensely diverse, and their performance can vary significantly. The difference between properly selecting which type of alternative to include in a portfolio—or not—can have a decisive impact on the final outcome.

To address this problem, Candriam proposes a functional allocation framework designed to go beyond the simple grouping of assets under the “alternatives” label. Instead of treating these strategies as a homogeneous block, the firm suggests classifying them according to the functional role they play within a portfolio, dividing them into three broad categories: downside protection, generation of uncorrelated returns, or capture of upside potential.

This segmentation enables the construction of more resilient and efficient portfolios, adjusting them dynamically according to the economic environment. The key, according to Candriam, lies in an active and centralized allocation that responds to market changes in real time.

Implications for Asset Allocation
Candriam concludes that adopting this more flexible and functional approach can improve results in three essential dimensions: higher returns, lower risk, and better-controlled drawdowns. To achieve this, it recommends two simple but powerful actions: selecting alternative assets that fulfill one of the three defined roles and dynamically rebalancing the portfolio according to the macroeconomic context.

The conclusion of the report is clear: the 60/40 model is not dead, but it does need a thorough revision. In an increasingly uncertain environment, the strategic inclusion of alternative assets could be the key to building truly diversified portfolios prepared for the future.

Vanguard Reduces Fees on Its Range of Fixed Income ETFs Available to European Investors

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Vanguard fee reduction — Pixabay CC0 Public Domain

Vanguard has announced the reduction of fees on seven of its fixed income exchange-traded funds (ETFs) available to European investors, effective July 1, 2025. According to the firm, this measure reinforces Vanguard’s commitment to making fixed income investing more accessible, especially in a context where bonds are playing an increasingly important role in investors’ portfolios.

“The bond market is currently twice the size of the equity market, but it remains opaque and costly. Investors deserve something better. At Vanguard, we believe that in investing, you get what you don’t pay for. Costs matter. By reducing fees, we are helping to make fixed income more accessible and transparent. We estimate that these changes will represent approximately 3.5 million dollars in annual savings for investors. We have already expanded, and will continue to expand, our fixed income offering throughout this year,” said Jon Cleborne, Head of Vanguard for Europe.

The following ETFs will have their fees reduced starting July 1.

Vanguard Positions Itself in Fixed Income
Vanguard is the second largest asset manager in the world, with 10.5 trillion dollars in assets under management globally as of May 31, 2025. Its fixed income group, led by Sara Devereux, manages more than 2.47 trillion dollars globally, combining deep expertise to deliver precise index tracking, prudent risk management, and competitive performance.

Earlier this year, Vanguard expanded its range of European fixed income products with the launch of the Vanguard EUR Eurozone Government 1–3 Year Bond UCITS ETF, Vanguard EUR Corporate 1–3 Year Bond UCITS ETF, Vanguard Global Government Bond UCITS ETF, and Vanguard U.K. Short-Term Gilt Index Fund.

Following these changes, the weighted average asset fee of Vanguard’s European range of index and actively managed fixed income funds will be 0.11%. Currently, Vanguard offers 355 fixed income index products in Europe, and on average, its range of fixed income ETFs is the most cost-effective in the European market. Across its entire product offering in Europe, the weighted average asset fee will now be 0.14%.

Lisandro Chanlatte and Carlos Asilis Create AC Global Investment Partners; Target UHNW Families

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Lisandro Chanlatte and Carlos Asilis, professionals with long experience in the financial market, became independent to create AC Global Investment Partners, an independent investment advisory and management platform prepared to “act as a trusted steward of the generational wealth” of ultra-high-net-worth families.

Both aim to be “long-term partners of sophisticated investors,” in their own words. They have set a goal of reaching 500 million dollars in AUMs within three years, working with between 20 and 40 families, both in the onshore and offshore markets.

In the founding documents of AC Global—reviewed by Funds Society—you can read the services the firm will offer, and also the way it will operate. Both partners will provide a comprehensive, customized solution for professional wealth oversight. It was designed exclusively to serve ultra-high-net-worth families with more than 25 million dollars in liquid assets under advisory.

Based in New York (Chanlatte) and Miami (Asilis), they promise to mediate between their clients and multiple financial providers, ensuring optimal asset management.

Above all, what will distinguish AC Global, Chanlatte assured Funds Society, is its independent perspective, which will avoid conflicts of interest in investment recommendations and biases in decision-making. The new firm will allow its clients to continue working with their preferred banks and providers, but “now optimized by professional oversight.”

For Chanlatte, “this will be more than a new company: it is a reinvented model to deliver institutional-quality investment management with the alignment, transparency, personalized service, and independence our clients deserve.”

The Chief Investment Officer of AC Global, Carlos Asilis, has managed institutional capital for pension funds, endowments, foundations, insurance companies, family offices, and U.S. private banking clients. “His multi-cycle track record reinforces our ability to deliver consistent, risk-adjusted returns in both stable market regimes and periods of stress,” states the firm’s founding document.

Different but Complementary Backgrounds
The backgrounds of Chanlatte and Asilis are different but highly complementary, adding value to the firm. The former has broad experience, acquired mainly at Citi Private Bank, where he led investment advisory teams and strategies for institutional and ultra-high-net-worth clients. Meanwhile, the latter specializes in macro investing and portfolio risk management.

Lisandro Chanlatte is an executive in the private wealth management industry with extensive experience in investment strategy, portfolio construction, and comprehensive asset allocation solutions for ultra-high-net-worth individuals and institutions. At Citi, he was part of the leadership team of Global Private Bank, the area of Ida Liu, who resigned from her position at the end of last January.

With a professional track record of over two decades, his experience in global asset management and business strategy focused on leading the Investment Advisory department of Citi Private Bank in North America.

Previously, as Chief Investment Officer for Latin America at Citi, he managed a significant investment business and led a large team across multiple financial centers. His responsibilities included developing investment strategies and overseeing about 50 billion dollars in assets. Almost his entire professional career was linked to the U.S. bank. Before joining Citi, he worked as an equity research associate, also in New York, at J.P. Morgan, and was Managing Director & Investment Officer at BAP Capital, a real estate fund.

Chanlatte holds a Bachelor’s degree in Business Administration from Loyola University New Orleans (summa cum laude) and an MBA from Harvard Business School. He is also a Chartered Alternative Investment Analyst (CAIA) and holds FINRA Series 7, 24, 31, 63, and 65 licenses.

Carlos Asilis is an expert with 30 years of experience in global macroeconomic investing, economic analysis, and portfolio construction. Before co-founding AC Global, he was a portfolio manager at Graham Capital Management and co-founder and Chief Investment Officer at Glovista Investments, where he managed multi-asset and emerging market strategies with peak assets exceeding 1.1 billion dollars.

Earlier, he was Chief Investment Strategist at JPMorgan Chase, where he advised institutional clients worldwide and defined global asset allocation views. At the start of his career, he worked at some of the world’s most respected macro and proprietary trading platforms: VegaPlus Capital Partners, Santander Global Proprietary Trading, and Credit Suisse First Boston. These experiences deepened his understanding of market cycles and risk management, skills that remain central to his investment philosophy as Chief Investment Officer of AC Global Investment Partners.

Asilis also worked as a research economist at the International Monetary Fund (IMF), where he was involved in economic surveillance programs and structural reform in China and Russia. He holds a Ph.D. in Economics from the University of Chicago and a Bachelor’s degree in Economics and Finance from the Wharton School at the University of Pennsylvania. His market approach is based on data and global insight.

Companies Risk Suffering More Acute Supply Chain Failures in 2025

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Supply chain failures risks — Pixabay CC0 Public Domain

In this 2025, organizations face an increased risk of suffering acute supply chain failures as a result of growing global geopolitical tensions and protectionist trade strategies, according to a new report published by Marsh.

According to its analysis, in addition to the risks associated with the reconfiguration of global trade and geopolitics, the report concludes that changing market and policy dynamics present both challenges and opportunities for organizations in the energy transition, especially regarding carbon credit markets (CCMs) and debt-for-nature swaps (DFNSs).

One of the findings highlighted in the report is that organizations trading with connector countries to circumvent existing or anticipated trade controls, or that have suppliers doing so, may be more exposed to disruptions induced by trade policies in the months and years ahead. “As a result of deteriorating relations between major trading partners, governments may also impose trade barriers on goods coming from connector countries, especially those that include components from the originally targeted country, which could create significant volatility in the global supply chain,” it notes.

What Can Companies Do?

To improve their resilience to supply chain shocks arising from the current geopolitical landscape, the report recommends that organizations review China’s commitment to its trade strategy and the underlying objectives of U.S. trade policy, and consider to what extent the current connector model will persist in relation to their business models.

The Political Risk Report states that changing market and policy dynamics present both challenges and opportunities in the energy transition, echoing the findings of the World Economic Forum Global Risks Report 2025, in which environmental risks dominate the 10-year horizon.

While global CCMs made significant progress at COP29 and DFNSs have also gained momentum, challenges remain in both areas regarding political risk and the possibility of default. Additionally, the growing climate compliance obligations, especially those stemming from new European Union regulations, may present operational risk challenges for organizations.

“Increased risks around the economy, geopolitics, and climate change are creating an incredibly complex operating environment, unlike anything organizations have experienced in decades. Those who build their ability to understand, assess, and mitigate the risks facing their operations are likely to be better positioned to identify opportunities where others only see ambiguity and to gain a competitive advantage in these uncertain times,” said Robert Perry, Global Head of Political Risk and Structured Credit at Marsh Specialty, in light of these findings.

The Dollar in Latin American Portfolios: Safe Haven or Burden?

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Latin American investors are battle-hardened. We come from a history marked by political and economic crises (the tequila effect in the 1990s, hyperinflation, the “corralito” and defaults in Argentina, the impeachment of Dilma Rousseff in Brazil, Chavismo in Venezuela, the banking crisis and dollarization in Ecuador…) that have led us to keep part of our savings abroad. Traditionally, Switzerland and the United States have been the preferred destinations for those seeking to protect their wealth from the volatility that has characterized many regional markets.

The Dollar and Stability: A Concept Deeply Rooted in the Collective Psyche

Regardless of where offshore accounts are held, the total asset composition of regional investors has followed an undeniable pattern: local currency and local assets in the domestic market, and hard currency in offshore accounts. The dollar has long been the safe-haven asset against decades of instability, and in the Latin psyche, it is the continent’s collective currency.

The dollar is the de facto currency for offshore investments, both for individuals and institutions. The rationale is clear: it is the hard currency tied to the world’s largest and most liquid market, both in equities and in debt. Additionally, during risk-off episodes, it has offered a refuge and low correlation with local assets.

According to data from J.P. Morgan, the dollar accounts for nearly 90% of global currency transactions, 66% of international debt, 58% of global reserves, and 48% of payments processed through SWIFT (Society for Worldwide Interbank Financial Telecommunication)[1].

The Problem: This Thesis May Be Tested in the Coming Years

The dollar’s overvaluation against a broad basket of developed and emerging currencies has been widely noted in recent years. However, under the shield of American exceptionalism, a correction seemed unlikely—until it wasn’t.

Currencies Can Defy Gravity for Long Periods

It is hard to pinpoint a single factor behind the correction now underway. Valuations matter, and by many expert accounts, the dollar was at levels of overvaluation not seen since 1985.

Combine this with an expansive fiscal policy, a growing deficit unlikely to be resolved, rising trade tensions, and declining confidence in U.S. institutional strength, and the market’s response becomes logical: “To lend to the United States—in other words, to finance its deficit—I now require a higher risk premium, and the same applies to the returns I expect from companies affected by tariffs.”

This same risk premium raises the risk-free rate used to discount future cash flows and value all financial assets. However, this premium is not global—it is specific to the United States due to its internal challenges. As a result, it should disproportionately affect U.S. debt and equity markets, as well as the dollar.

Additionally, the impact on sentiment, uncertainty, and the erosion of confidence in U.S. fiscal and trade policy may reduce investment inflows to the U.S., redirecting capital toward stronger economies with better growth potential.

What Does This Mean for the Latin American Investor?

The first takeaway is that, in the medium term, the dollar may no longer serve as the region’s safe haven. One can easily imagine a market correction—not as extreme as 2008—where local currency assets post negative returns while the dollar itself also weakens. In this scenario, portfolios heavily invested in offshore dollar assets could suffer a double loss: losses in local markets amplified by losses in dollar-denominated investments. The same would apply to the total net worth (domestic and offshore) of private investors.

For institutions in countries with high domestic interest rates—such as Brazil or Mexico—the situation is even more complex. These portfolios are often expected to deliver returns comparable to local rates, which leads to an overweight in equities, high-yield credit, and generally riskier assets. Historically, the thinking has been that a rising dollar would cushion declines in risk assets and local holdings.

It is important to note that a correction in the dollar toward long-term fair value does not negate its role as a safe haven in extreme risk-off scenarios. However, when the imbalances stem from the U.S. itself and uncertainty surrounds its policy direction, a drop from historically elevated levels seems reasonable.

No Magic Solutions, Only Sound Investment and Portfolio Principles

A logical response to today’s uncertainty is to seek diversification into other hard currencies and markets. At the individual level, several advisors and asset managers note that currently less than 5% of Latin American investors’ wealth is allocated outside the dollar. Institutions—central banks excluded—also show very low levels of currency diversification.

A good starting point for diversifying the assets of individuals and institutions in our region would be to reference the weight of the dollar and U.S. assets in global equity and bond indices.

The MSCI World is a global equity index representing large- and mid-cap companies in 23 developed countries (it does not include emerging markets). It is capitalization-weighted, with the United States accounting for around 70% as of the end of May 2025. Because it excludes emerging markets, this index complements portfolios already exposed to Latam.

In fixed income, the Bloomberg Global Aggregate Bond index is widely regarded as a reference for a diversified, high-quality debt portfolio. In it, the U.S. represents nearly 40%—meaning the investor has 60% exposure outside of the dollar and U.S. bond markets, with allocations to countries such as Japan, Germany, and Canada, among others.

Beginning to think in terms of global indices rather than the S&P 500 would be a first step toward building more resilient portfolios for the Latin American investor. In a recent note, J.P. Morgan Private Bank stated: “Given that dollar risks appear to be skewed to the downside, we believe investors (particularly those whose wealth is denominated in another currency) should review their currency allocations as part of a broader, goal-based plan.”

I couldn’t agree more. It’s time to review portfolios and consider the range of possible scenarios for the coming years—a task that many advisors and portfolio managers in the region have likely already begun.

[1] Source: J.P. Morgan Private Bank, www.privatebank.jpmorgan.com/latam/es/onsights

Balanz Positions Itself in Uruguay as a Full Investment House, Expanding Its Reach and Services

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Following approval by the Central Bank of Uruguay and the Montevideo Stock Exchange, Balanz announced in a statement the completion of the acquisition of 100% of the shares of Corporación de Inversiones Uruguay Sociedad de Bolsa S.A. (CIU). With this, the firm founded in Argentina marks a new milestone in 2025, the year in which it reached $10 billion in assets under management.

“This acquisition marks a milestone in Balanz’s expansion strategy in the country, establishing itself as a Full Investment House offering a comprehensive range of financial services,” the statement added.

With this integration, its operational capacity is expanded by incorporating the licenses of Securities Broker, Portfolio Manager, and Stockbroker. This structure enables the firm to provide comprehensive solutions in financial advisory, investment management, and brokerage operations, both locally and internationally.

Additionally, the firm has intensified its expansion in Uruguay through the enlargement of its offices and the hiring of local talent.

“It is a great pleasure and joy to share this news, which undoubtedly reflects the teamwork we’ve been doing in Uruguay,” said Juan José Varela, CEO of Balanz Uruguay.

Balanz is a company that, in recent years, has made significant investments in technology: “This focus has been key to democratizing access to investments and offering financial solutions tailored to each client’s needs. In Uruguay, its consolidation as a Full Investment House is expected to drive the full evolution of the investment market, through improvements in infrastructure and adaptability to user needs,” the company stated.

Balanz has over 20 years of experience in the capital markets, with a presence in Argentina, the United States, the United Kingdom, Panama, and Uruguay. It serves more than 1,000,000 clients and recently achieved a historic milestone by surpassing $10 billion in assets under management (AUM).

Foreign Investors Sold Nearly $41 Billion in Treasury Bonds Following Trump’s Tariff Announcement

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On April 2, an exuberant Donald Trump announced that the United States was imposing tariffs on the entire world. That same month, Treasury bonds experienced weeks of historic volatility, and foreign investors sold a net total of $40.8 billion in U.S. bonds and notes with maturities longer than one year—the largest amount sold since December. The data comes from the latest Treasury report.

Part of that selloff was offset by $6.042 billion in purchases by foreign central banks, according to a Barron’s report. As a result, foreign holdings totaled over $9 trillion for the month, the second-highest amount ever recorded.

Treasury bonds went through a historic wave of selling in April, with the 30-year yield posting its biggest weekly gain since 1987, while the 10-year yield saw its largest weekly gain since the end of the 2001 recession, according to Dow Jones Market Data.

Recent estimates indicate that foreign investors hold about 30% of publicly held Treasury debt, down from nearly 50% in 2008. The U.S. public debt market is valued at $28.6 trillion. Foreign holdings have seen a near-constant increase since 2022. Japan and the United Kingdom are the largest holders, followed by China. The first two countries increased their holdings in April, while China reduced theirs.

“The safe-haven status of these assets is increasingly being questioned, and our data clearly reflects this trend,” said John Velis, macro strategist for the Americas at BNY, according to an article in Market Watch.

According to BNY data, foreign sales were recorded on eight of the last eleven trading days since April 4. The 10-year Treasury yield nearly reached 4.5% on April 11, when foreign investors exited the market, according to the same source.

Trump’s trade policy is joined by other factors explaining these movements in the U.S. bond market. According to Jay Barry, Global Rates Strategist at J.P. Morgan, hedge funds placed large leveraged bets early in the spring that were forced to unwind, which could be one reason for the wave of selling. Investors may also simply be rebalancing their portfolios, as market confidence in international assets, such as German government bonds, has improved.

High-Net-Worth Families Around the World Are Accelerating the Transfer of Wealth to Their Heirs

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The “Great Wealth Transfer” is underway, and inheritance patterns are changing, with significant implications for the distribution of wealth and financial markets. A study by Capital Group, a firm specialized in active investments with approximately $2.8 trillion in assets under management, indicates that high-net-worth (HNW) families around the world are accelerating the transfer of wealth to their heirs.

The study surveyed 600 high-net-worth individuals from Europe, Asia-Pacific, and the U.S. to understand their approach to inheritance and their own succession planning.

“It is estimated that in the coming decades, baby boomers in the United States, Europe, and developed countries in Asia will transfer trillions of dollars to younger generations. Millennials and Generation Z are receiving larger inheritances at a younger age and could benefit from a financial advisor’s market knowledge and long-term investment perspective. At Capital Group, we have built lasting partnerships with wealth managers based on the belief that expert financial advice and strong long-term investment performance drive better outcomes for asset holders and their beneficiaries,” says Guy Henriques, President of Distribution at Capital Group in Europe and Asia.

Attracting the Next Generation of High-Net-Worth Individuals
According to the study, nearly half of all respondents (47%) inherited directly from their grandparents, and the majority (55%) received between $1 million and $25 million. Millennials are more likely to turn to social media and “finfluencers” for investment advice when inheriting (27%) than to financial advisors (18%). Furthermore, 65% of Generation X and Millennial heirs who participated in the study say they regret how they used their inheritance money, and nearly two in five wish they had invested more.

In the case of Spaniards, they are more likely to invest their inheritance: 37% compared to the 33% global average.

Maximizing the Potential of Inheritance
According to a recent study, three quarters of respondents say they have difficulty communicating their inheritance plans, and the majority turn to lawyers (61%) or accountants (49%) to manage them, while only 20% turn to financial advisors.

Additionally, 79% do not specify how the inherited capital should be used, which contributes to much of that money remaining idle or underutilized: only 22% is invested in funds and just 11% is allocated to pension plans.

This lack of strategy is reflected in the dissatisfaction of asset holders: 60% are unhappy with how they used their inheritance, and one third regret not having invested enough. In Spain, 54% of high-net-worth individuals wish they had directed more of their inheritance toward investment.

“Our study reveals that most of these asset holders wish they had used their inheritance differently and invested more. At Capital Group, our mission is to improve people’s lives through successful investing. We believe that if they consider investing part of their newly acquired capital, individuals with substantial wealth could build long-term prosperity. As a company with 94 years of experience, we have partnered with clients to invest across multiple generations, and as markets rise and fall, it is important to remember the value of staying invested for the long term,” concludes Guy Henriques, President of Distribution at Capital Group in Europe and Asia.

Active ETFs Will Gain Ground at the Expense of Mutual Funds and Structured Notes

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The active ETF industry is undergoing rapid global expansion, and this growth is expected to continue for several years, driven by the advantages these investment vehicles offer to markets. This was the consensus view at the ETFs Summit organized by S&P Dow Jones and the Mexican Stock Exchange (BMV). It was discussed during the event that active ETFs may eventually take market share from instruments such as mutual funds and structured notes.

The summit addressed the future of ETFs, their role alongside other investment tools, and the factors that make them attractive—factors that are fueling the momentum of exchange-traded vehicles worldwide.

During the panel titled “The Evolution of Wealth Management in Mexico: Current Landscape and Future Direction,” moderated by Alicia Arias, Commercial Director at LAKPA and co-founder of Mujeres en Finanzas, Mexico chapter, with participation from Nicolás Gómez, Managing Director and Head of ETF (iShares) and Index Investments for Latin America at BlackRock, and Juan Hernández, Managing Director of Vanguard Latin America, the future of ETFs took center stage.

“Active ETFs are going to grow significantly, but not as substitutes for index ETFs—they will grow at the expense of the active mutual fund industry and the structured notes industry,” explained Gómez.

“I believe the reason for the strong growth of active ETFs comes from the world of Wealth Management, because the most important feature of mutual funds—the retrocession—is no longer necessary. So, if this is no longer needed, it’s possible to compare an institutional-class, clean-class active mutual fund with the same strategy in an active ETF,” he added.

What becomes apparent are the advantages of ETFs, the main one being intraday pricing. That is, they can be purchased at the quoted price at any moment. In contrast, with a mutual fund, it is impossible to know the purchase price at the time of the transaction, as it is neither the current price nor the end-of-day price, but rather the price on the next day. In this context, considering market volatility, trading mutual funds becomes extremely complex—essentially, trading blind, noted both panelists.

“That’s why, with retrocession no longer required, we’re going to see the active mutual fund industry shift toward active ETFs, as well as the structured notes industry—where with an ETF that replicates the same strategy, you have liquidity because it can be sold at any time,” added the BlackRock executive. He also pointed out that there is no counterparty risk, since “owning an ETF means owning the underlying assets—that is, the beta inside plus the listed options.”

Another relevant issue is mobility and market regulation. Currently, there are between $1.5 and $2 trillion in inflows to ETFs, compared to $400 million in outflows from mutual funds. Part of this involves conversions: managers have already converted millions of dollars from mutual funds into ETFs, including firms represented on the panel—iShares and Vanguard.

Of the 600 ETFs launched last year, 400 were active ETFs. The active management industry is innovating through ETFs, and experts pointed out that regulators are likely to approve the launch of new ETF series from within mutual funds. Once this happens, the vast majority of active mutual funds with commercial value will also offer an ETF version.

Crypto World and ETFs Also Expanding

In the cryptoasset industry, the growth outlook is also positive. This includes ETFs linked to this space. “Three dynamics are taking place: first, continued adoption by what we call the ‘whales’—people who have already made fortunes in crypto and, for example, hold bitcoin, and who are now beginning to prefer keeping their assets within an ETF alongside their bonds, stocks, etc.,” said Gómez.

“Second, the advisory world, which knows that bitcoin’s market capitalization stands at $2.2 trillion, is interested in incorporating bitcoin cryptoassets in portfolios to monetize them. The third dynamic is that the traditional financial industry increasingly understands bitcoin’s role in portfolios and its fundamentally different characteristics from the rest of the market. The supply is limited, for instance. It’s been a long journey, but various asset managers are now defining their strategies,” the panelist explained.

Thus, portfolio models must focus on behavioral aspects, wealth management, and financial planning, enabling financial advisors and asset managers to concentrate on activities that bring more value to investors.

Vanguard closed the panel with a figure that supports the trend, stating that in the United States, around 50% of all ETF flows originate from model portfolios—either proprietary or from different asset managers. This is a trend that will continue, and in this context, the presence and growth of the ETF market are undeniable.

The Future of Alternatives

Undoubtedly, the alternatives industry also has a promising future. Technology has driven its rise, and some semi-liquid funds are already appearing in the portfolios of individual investors. As highlighted at the S&P Dow Jones and BMV summit, these strategies have ceased to be almost exclusively for large investors. To put this in perspective, the industry is already worth nearly $20 trillion, with private equity accounting for 40%—up from $5 trillion just five years ago.

“It’s very important to note, however, that this is a different asset class. It has illiquidity. We’ve already seen this in the United States, and there is a liquidity premium. But just as important is the fact that there’s a significant dispersion in returns between the top managers, the average ones, and the lowest-performing ones,” said Hernández, Director of Vanguard Latin America.

“So yes, I would say alternatives are viable—but with careful allocation, because there is a liquidity premium, and investors must also ensure they have access to the best managers and products,” the executive concluded.

41% of Global Asset Owners Use Multiple Benchmarks for Their Investments

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41% of global asset owners use multiple benchmarks, while 59% continue to use only one. These are the findings from the “Asset Owner Performance Survey According to GIPS Standards,” conducted by the GIPS Standards Asset Owner Subcommittee and CFA Institute Research, the global association of investment management professionals, in 2024.

“Benchmarks based on asset allocation weighting are the most widely used, with 61% of asset owners employing this type of benchmark. For target returns, the most prevalent is the benchmark based on the actual weightings of asset classes,” explains Hugo Aravena, President of CFA Society Chile.

The GIPS standards are ethical guidelines for calculating and presenting investment performance, based on the principles of fair representation and full disclosure. In recent years, more asset owners have opted to follow these standards. 24 of the 25 most prominent managers in the world state that they comply with the GIPS standards in full or in part when presenting their returns.

The survey shows that 93% of respondents are at least somewhat familiar with the GIPS performance standards, and 67% of the sovereign funds surveyed are in compliance with the GIPS standards, “which demonstrates that the GIPS standards are of utmost importance to sophisticated investors managing large volumes of assets globally.” According to the study, more than two-thirds (68%) require or inquire about GIPS compliance when selecting external managers of liquid asset classes, and 19% require a declaration of compliance for selection.

“Compared to the 2020 report, more asset owners now state that they comply with the GIPS standards, plan to do so in the future, or inquire about compliance when hiring firms to manage their investments. This shows a growing demand for financial performance to be presented in a transparent and fair manner,” says Aravena. Additionally, 8% require their external managers of illiquid assets to declare GIPS compliance, while 41% of them either require or inquire about GIPS compliance when selecting external managers.

Finally, 59% of investors indicate that they already present the returns required by the GIPS standards (i.e., net of fees and costs) to their supervisory body. “We are aware of the need to advance in presenting risk and return indicators that comply with international standards, so that investors have access to more transparent, complete, and standardized information, making it easier to compare among similar investment alternatives,” concludes Aravena.