We often talk about SAA, vs DAA.

SAA, the collection of portfolio exposures designed to produce particular risk and return outcomes, given previously set objectives, and DAA, a process layer built atop SAA, designed to smooth out the investment experience (ideally, to reduce the frequency and magnitude of adverse events).

With SAA, that often means discussing the equity risk premia, and more specifically what an allocation to equities is designed to contribute, over (sufficiently) long periods of time. How equities behave, what compounding of wealth and time value of money looks like as the “lived experience”.

And the below is a pretty good demonstration.


Despite a near infinite number of things to fret about, human ingenuity and progress has resulted in the “overcoming” of every major negative we’ve ever encountered.

The above clearly looks at just the last decade, but this statement is trivially (as in factually, objectively, no analysis required) true given all-time highs for many equity markets.

From the perspective of risk, the past year (to narrow our focus a bit) has looked pretty much like a normal year, albeit at a much higher level (as in we’ve had some outside returns by magnitude, but not by Sharpe).


Important Information: This document has been prepared by Aequitas Investment Partners ABN 92 644 165 266 (“Aequitas”, “our”, “we”), a Corporate Authorised Representative (no. 1284389) of C2 Financial Services, (Australian Financial Services Licensee no. 502171), and is for distribution within Australia to wholesale clients and financial advisers only.

This document is based on information available at the time of publishing, information which we believe is correct and any opinions, conclusions or forecasts are reasonably held or made as at the time of its compilation, but no warranty is made as to its accuracy, reliability or completeness. To the extent permitted by law, neither Aequitas nor any of its affiliates accept liability to any person for loss or damage arising from the use of the information herein.

Please note that past performance is not a reliable indicator of future performance.

General Advice Warning: This document has been prepared without taking into account your objectives, financial situation or needs, and therefore you should consider its appropriateness, having regard to your objectives, financial situation and needs. Before making any decision about whether to acquire a financial product, you should obtain and read the relevant Product Disclosure Statement (PDS) or Investor Directed Portfolio Service Guide (IDPS Guide) and consider talking to a financial adviser.

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