The Global Market Portfolio (GMP) framework could be employed to compare changes that portfolios underwent during the pandemic with those during previous such crises. The GMP covers all investable assets and their market value at a given point in time and represents the aggregate positioning of investors, reflecting their investment and risk preferences. Compared with US$139.6 trillion in value in December 2019, the GMP grew significantly to reach US$147.1 trillion as of September 2020. Our expected return for the GMP over the next 12 months is 3.1%, closer to our 2019 forecast but significantly lower than our first GMP estimate of 4.5% in 2014. In this context, dynamic asset allocation could play a key part in both engineering higher returns and reducing risk, allowing investors to improve the risk and return profile of their portfolios and assess them relative to the GMP in order to target better outcomes. The GMP is also useful as a background to informed portfolio benchmarking, evaluation and construction. It is particularly relevant in a dynamically changing market environment that sees the emergence of new asset classes, strategies, pricing dynamics and regulations.
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