To handle these challenges, traders face a typical menu of choices (Exhibit 1). To enhance the tradeoff between danger and return in portfolios, they will reallocate to asset lessons offering higher risk-adjusted returns, decrease correlations, or a little bit of each. Lately, for instance, sure traders have elevated their allocations to options, together with illiquid non-public belongings like non-public fairness and actual property. Though this has been a profitable strategy, most of these automobiles usually are not out there to many particular person traders.
