In an uncertain economic environment, investors increasingly find themselves searching for one elusive quality: predictability. Volatile markets, shifting interest rates, and unpredictable geopolitical events have made traditional investment strategies feel less stable than in years past. Yet while many investors want more consistency, they are unwilling to give up the potential for long-term growth.
The good news? Predictability and growth do not have to be mutually exclusive. With the right mix of assets, particularly those outside traditional markets, investors can design portfolios that provide both stability and opportunity.
Here’s how high-net-worth and accredited investors can enhance predictability without compromising on performance.
1. Understand Where Traditional Predictability Falls Short
Historically, bonds were the go-to vehicle for investors seeking predictable returns. But factors like inflation, interest rate volatility, and shifting economic cycles have dramatically changed the role bonds play in portfolio construction.
Today:
- Bond yields no longer reliably outpace inflation
- Interest rate movements can quickly erode fixed-income value
- Correlations between stocks and bonds have risen in recent years
This environment forces investors to rethink how predictability is achieved, and where additional stability can be sourced.
2. Look Beyond Markets: Incorporate Non-Correlated Assets
One of the most effective ways to create predictability is through assets that behave independently of traditional markets. These include:
- Life settlements
- Private credit
- Infrastructure
- Certain types of real assets
- Insurance-linked securities
Among these, life settlements are becoming especially attractive due to their unique characteristics: predictable timelines, contractually guaranteed payouts, and independence from interest rates and public markets.
When a portion of a portfolio is allocated to assets whose performance is determined by contractual obligations, not market movements, the overall volatility of that portfolio decreases substantially.
3. Use Alternatives to Smooth Out Long-Term Performance
Growth-oriented investors often assume that reducing volatility means sacrificing upside, but that isn’t necessarily true. In many portfolios, the issue is not the presence of risk, it’s the concentration of that risk in correlated assets.
Incorporating alternatives helps:
- Reduce the impact of market drawdowns
- Enhance return consistency
- Provide sources of positive performance even during downturns
For example, during periods when equities struggle due to interest rate uncertainty, life settlement portfolios may remain steady because they are based on actuarial outcomes rather than economic cycles.
4. Leverage the Power of Actuarial Predictability
One of the most compelling advantages of life settlements is the actuarial foundation behind them. Predictability in these portfolios stems from:
- Statistical life expectancy modeling
- Fixed premium schedules
- Contractually guaranteed death benefits
- Oversight by financially strong insurance carriers
Rather than relying on market forecasts or economic speculation, both inherently uncertain, investors benefit from structured, measurable, and historically stable performance drivers.
This actuarial basis provides investors with clarity, offering the potential to achieve growth without the emotional roller coaster often associated with public markets.
5. Balance Growth and Predictability Through Diversification
Predictability doesn’t happen by replacing all growth assets with conservative holdings. Instead, it’s achieved through intentional diversification across distinct risk and return drivers.
A balanced, modern portfolio often includes:
- Public equities for long-term growth
- Fixed income for income and stability
- Alternatives (such as life settlements) for predictability and non-correlation
- Select private investments for enhanced upside potential
By combining these, investors can dampen volatility without giving up on growth objectives.
6. Seek Investments that Perform Independently of Economic Cycles
Investments influenced by consumer behavior, corporate earnings, or macroeconomic shifts often move together, even across different sectors. To increase predictability, investors should intentionally incorporate assets that do not depend on:
- GDP growth
- Employment data
- Interest rate movements
- Monetary policy
- Corporate profitability
Life settlements, for example, are not tied to any of these variables. Their independence makes them particularly valuable during periods of economic uncertainty.
7. Partner With Specialized Managers for Better Outcomes
While alternatives like life settlements provide meaningful advantages, they require sophisticated expertise. A specialized manager can offer:
- Rigorous due diligence
- Accurate life expectancy modeling
- Diversified policy pools
- Ongoing premium management
- Compliance oversight
For investors who want predictability with strong potential returns, partnering with an experienced firm, such as Moss Point Financial, ensures the asset class is handled with the precision and oversight it requires.
Final Thoughts
Predictability does not have to come at the cost of growth. In today’s environment, building a resilient portfolio is less about avoiding risk and more about choosing the right kinds of risk.
By incorporating non-correlated, actuarially-driven assets like life settlements, alongside traditional holdings, investors can create a more stable financial foundation without diminishing long-term potential. For high-net-worth individuals seeking clarity and consistency, this balanced approach represents a powerful path forward.