The New Diversification: Open Your Eyes to Alternatives

A Conversation with Professor Christopher C. Geczy, Ph.D.

During the credit crisis, many investors discovered to their unfortunate surprise that their portfolios were not nearly as protected from downside risk as they thought and that their traditional notion of "diversification" failed their expectations. As part of our efforts to provide investors with perspective on how to implement what BlackRock terms "The New Diversification," we sat down for a discussion with Professor Christopher Geczy.

• Modern Portfolio Theory did not fail during the credit crisis—portfolio construction did. Many investors did not have exposure to enough different asset classes.
• Investors should consider incorporating a much wider range of strategies and assets as part of their core investment strategy.
• The notion of "alternative" investing is often misunderstood. Gaining access to different types of investments is an approach that almost everyone should employ, and many strategies are now available to a broad range of individuals.

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The opinions presented are those of Professor Christopher Geczy as of April 2013, are not necessarily those of BlackRock or The Wharton School, and may change as subsequent conditions vary. Individual portfolio managers for BlackRock may have opinions and/or make investment decisions that, in certain respects, may not be consistent with the information contained in this report. This material is not intended to be relied upon as a forecast, research or investment advice, and is not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy. The information and opinions contained in this material are derived from proprietary and nonproprietary sources deemed by BlackRock to be reliable, are not necessarily all-inclusive and are not guaranteed as to accuracy. Past performance does not guarantee future results. There is no guarantee that any forecasts made will come to pass. Reliance upon information in this material is at the sole discretion of the reader.

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