Loading...
Portable Beta
Strategies that seek to benefit from enhanced diversification and create capital efficiency.

Grounded in the premise of diversification.

Portable beta strategies seek to enhance returns by overlaying an existing portfolio strategy with complementary exposure to diversifying asset classes.

Overlays are achieved with cost-efficient derivatives (e.g. futures), allowing investors to receive the incremental total return of the underlying exposure less a short-term financing cost (typically very close to historical three-month Libor).

A focus on capital efficiency.

In overlaying exposure on an existing portfolio strategy, portable beta strategies seek to make every invested dollar more.  This can free up dollars in an investor’s portfolio to invest in other asset classes or investment opportunities.


For information on how to invest in these strategies, click here.


The 90/60 Example

Consider an investor who holds a 100% equity portfolio. To improve the diversification within her portfolio, she might consider selling some equities to buy U.S. Treasuries. Doing so, however, will likely result in a lower-risk portfolio with commensurately reduced return expectations.

An alternative approach is to set aside modest capital outlay to obtain synthetic exposure to U.S. Treasuries (e.g. through derivatives like futures or swaps). For example, she might set aside 10% of the capital as collateral for a 60% position in 10-year U.S. Treasuries futures. This is the portable beta overlay.

Taken together, the investor has created a 90/60 stock/bond mix. This portfolio should achieve a return commensurate with that of a 1.5x levered 60/40 portfolio minus the financing rate embedded in the U.S. Treasuries derivatives contracts.


You are about to leave the Newfound Research LLC website and are being re-directed to the Newfound Research Mutual Funds website. Please note that Newfound Research Mutual Funds site may be subject to rules and regulations that may differ significantly from those to which the Newfound Research website is subject and may not be appropriate for use by residents in all jurisdictions.
You are about to leave the Newfound Research LLC website. The following link may contain information concerning investments, products or other information. Newfound Research LLC is not responsible for the accuracy or completeness of information on non-affiliated websites and does not make any representation regarding the advisability of investing in any investment fund or other investment product or vehicle. Importantly, Newfound Research LLC is not compensated for linking you to any non-affiliated website and instead is only compensated with an asset-based fee in the limited capacities as either a licensor of intellectual property or a sub-adviser to an investment adviser. The material available on non-affiliated websites has been produced by entities that are not affiliated with Newfound Research LLC. Descriptions of, references to, or links to products or publications within any non-affiliated linked website does not imply endorsement or recommendation of that product or publication by Newfound Research LLC. Any opinions or recommendations from non-affiliated websites are solely those of the independent providers and are not the opinions or recommendations of Newfound Research LLC, which is not responsible for any inaccuracies or errors. THIS INFORMATION IS NOT AN OFFER TO BUY OR A SOLICITATION TO SELL ANY SECURITY OR INVESTMENT PRODUCT. SUCH AN OFFER OR SOLICITATION IS MADE ONLY BY THE SECURITIES’ OR INVESTMENT PRODUCTS’ ISSUER OR SPONSOR THROUGH A PROSPECTUS OR OTHER OFFERING DOCUMENTATION.