SONNY’S VIEW · ASSET ALLOCATION

Asset Allocation

Forward return expectations, constrained efficient frontiers and portfolio construction, tested against a stated hurdle in nominal and real terms.

HOW WE WORK

Constrain before you optimise

  1. 01Set forward return expectations asset class by asset class, and state the inflation and fee assumptions out loud.
  2. 02Solve the frontier separately under each liquidity regime; the illiquidity cap is a constraint in the optimisation, not a footnote after it.
  3. 03Test the result against the hurdle in both nominal and real terms before calling anything achievable.

EQUITY ALLOCATION · OCTOBER 17, 2026

H2 2026 Equity Allocation Brief

A top-down look at the nine stocks I hold and why each one is there. The nine holdings fall into four layers by portfolio role. Macro expression is the largest layer, and BRK is the largest single position.

Exhibit. Portfolio structure by role, nine holdings
25.5%
39.5%
21.9%
13.1%

13.6%

AI exposure, against 42.1% for SPY

0.07

Average correlation between holdings, past year

0.68

Market beta: a 10% S&P drop still means about 7%

SCORECARD · EIGHT MACRO VIEWS

From the mid-year outlook and the September piece, checked before building the portfolio.

5 hit 1 broadly hit 1 still pending 1 missed

The miss was the long end: the rise in long-term yields was driven by term premium. The next real test is the December 9 FOMC.

Family accounts managed by the author hold all nine stocks discussed. Not investment advice.

ASSET ALLOCATION · JULY 2026

The difficulty of a five percent target depends entirely on how you define it

Read the note

A 5% nominal target is readily achievable today with high-quality fixed income, at roughly one-fifth the volatility of a conventional balanced portfolio. A 5% real target, net of fees, sits at or beyond the edge of what the full investable universe can reasonably support.

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5% NOMINAL Achievable Every client scenario clears it with high-quality fixed income, at roughly one-fifth the volatility of a conventional balanced portfolio. The open question is how little risk it takes, not whether it is reachable.
5% REAL · 8.2% GROSS Out of reach Only the accumulator touches it, at the very tip of its frontier with 35% illiquid. The retiree, capped at 10% illiquid, peaks at 7.86% and cannot get there at all.

Constrained efficient frontiers under three client liquidity regimes; ten-year annualized basis, data as of July 16, 2026. Not investment advice; see the note's limitations section.

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