Multi-Asset Managers Divided on Benefits of US Treasuries for Diversification

In a recent analysis by Investment Week, multi-asset managers are split on whether US Treasuries remain the first choice for sovereign bonds in their portfolios. Some managers are opting for European fixed income instead, citing the lack of urgency to increase household spending in the US as a reason to explore other options. The Treasury market has historically served as a diversifier to equities in multi-asset portfolios, but US sovereigns struggled alongside other bonds during the reflation period of 2021-2023, including flight-to-safety periods like Q1 2022 [58133875].

This analysis provides a different perspective on the role of US Treasuries in diversification strategies. While previous articles emphasized the importance of diversifying short-term portfolios with high-quality bonds and cash, this analysis suggests that some multi-asset managers are questioning the effectiveness of US Treasuries as a diversifier. The lack of urgency in US household spending and the performance of US sovereigns during the reflation period are cited as factors influencing this shift in perspective. As a result, some managers are turning to European fixed income as an alternative option [58133875].

It is important to note that diversification strategies may vary among different investment professionals and depend on individual risk preferences and market conditions. While US Treasuries have historically played a significant role in multi-asset portfolios, this analysis highlights the ongoing debate among managers regarding the benefits of US Treasuries versus other options like European fixed income. Ultimately, the decision to include US Treasuries or explore alternative sovereign bonds depends on the specific goals and risk tolerance of each portfolio [58133875].

As crypto prices rise, DAOs are considering token sales to lock in cash reserves and fund operations. DAOs are increasingly wary of overdependence on their native tokens due to their volatility. Uniswap's UNI token dropped 20% after Uniswap Labs received a notice from the US Securities and Exchange Commission. Uniswap DAO voted to establish a working group to diversify its $6.4 million treasury held in UNI tokens. A report found that almost two-thirds of the 25 largest DAOs hold over 90% of their treasuries in their native tokens. Diversification is crucial for DAOs to ensure resilience and sustainability. CoW DAO has a diversified treasury with 88% in its native COW token and the remaining 12% in stablecoins and Ether. DAOs can earn income through tokens like Lido's stETH and Rocket Pool's rETH. Holding some fiat currencies and yield-bearing stablecoins is recommended to hedge against crypto volatility. A 90% threshold is considered a good indicator for diversification. Diversifying treasuries can be unpopular, but some DAOs prefer diversification through real-world asset providers. It can take time to coordinate token sales for diversification proposals. [a43b4ca3]