The prolonged low-interest-rate environment continues to compress returns from traditional fixed-income assets. Meanwhile, global market uncertainty shows no sign of abating, with faster rotation across equities, bonds, and commodities, making single-asset allocation increasingly challenging.

For investors, the core question is no longer simply "what to buy," but rather how to strike a new equilibrium between returns and risk. The goal is to avoid missing out on gains through excessive caution, while also guarding against volatility and drawdowns that exceed expectations when chasing higher yields.

Recently, Liang Hui, General Manager of Ju Xiang Capital, sat down with Sina Finance to discuss asset allocation under low interest rates, the logic behind building a multi-asset, multi-strategy portfolio, and how quantitative frameworks adapt to shifting market conditions. In his view, low rates do not automatically warrant simply increasing equity exposure, nor do they guarantee that any particular asset class will rise. What truly matters is giving the portfolio more sources of return, while enhancing its ability to navigate diverse market environments through risk budgeting, asset diversification, and strategic coordination.

Low Rates Challenge Single-Asset Allocation Strategies

Historically, some investors have shifted allocations among deposits, wealth management products, bonds, and equities. Yet in an era defined by low rates and high volatility, this single-direction approach is becoming increasingly inadequate. Bond yields have already fallen to low levels, making it harder to boost returns through capital gains alone. At the same time, equity markets are showing pronounced internal divergence, with volatility intensifying in hot sectors.

Market dispersion is now a key factor shaping portfolio performance. Liang noted that both the economy and capital markets exhibit a "K-shaped" pattern: industries tied to exports and AI are performing strongly, while other sectors face persistent pressure. This industrial divergence feeds into capital flows and asset pricing, and when sentiment concentrates in a few directions, price swings can be amplified. Therefore, the challenge for investors is not simply a matter of high or low risk appetite, but how to prevent portfolios from becoming overly exposed to a single asset class, style, or market regime.

Equity-Bond Balance Still Works, but Diversification Matters More

Traditional equity-bond portfolios remain a cornerstone of asset allocation. Liang believes that stocks and bonds generally maintain a weak correlation in most scenarios, so the underlying logic of equity-bond balancing has not broken down. However, the real challenge is that both asset classes face return pressures. Within equities, internal dispersion has widened, making steady returns harder to achieve. Bonds, meanwhile, are constrained by a lower interest-rate floor. Together, these factors mean the traditional portfolio's "sense of balance" feels less robust than before.

In his view, allocation ratios should not be mechanically derived from rules of thumb like "80/20" or "70/30," but rather set according to portfolio volatility, risk tolerance, and long-term objectives. For capital seeking steady returns, relying solely on equities and bonds may not be enough to cover today's complex and volatile market environment. This is precisely where the value of multi-asset, multi-strategy approaches comes to the forefront.

Liang explained that Ju Xiang Capital's approach is to introduce additional asset classes such as gold alongside equities and bonds. Within the equity sleeve, the firm allocates across value, growth, small-cap, and other styles, while also keeping an eye on opportunities in different markets. With a broader set of asset classes and return sources, the portfolio can exploit correlation differences across assets to smooth volatility to some extent.

"It's not simply about piling more assets together," Liang said. "It's about ensuring different assets and strategies each play a defined role within the portfolio."

Risk Budgeting as the Core for Improved Portfolio Adaptability

The key to a multi-asset, multi-strategy framework is not merely adding more instruments, but establishing a comprehensive return-risk management structure. Liang noted that Ju Xiang Capital's multi-asset, multi-strategy approach is built on quantitative methods. At the top level, a volatility or risk-budget framework determines allocation across asset classes; within equities, different sub-strategies are then assigned. The aim is not to predict every market move, but to ensure the portfolio does not depend on any single market direction or specific market regime.

Within this framework, bonds serve a role beyond coupon income; they are crucial for managing portfolio volatility. If bond allocation can lower the portfolio's overall volatility, it becomes possible to maintain a more reasonable exposure to risk assets like equities under a given risk target, thereby improving risk-adjusted returns. Meanwhile, with net risk exposure kept under control, the portfolio can participate in more assets and strategies, avoiding over-concentration of return sources in any one market.

Risk control must also be proactive when it comes to extreme market scenarios. Liang observed that in traditional environments, equities and bonds typically show weak or slightly negative correlation, but in certain exceptional phases, they can move in tandem. Therefore, strategies need pre-set adjustment mechanisms for situations like correlation breakdowns or rising volatility, rather than relying entirely on reactive judgment.

Quant Provides the Framework for a More Sustainable Balance

Regarding the relationship between fundamental and quantitative investing, Liang believes the two are not substitutes in a zero-sum sense. The strength of fundamental investing lies in investors' understanding of industries, companies, and macroeconomic changes, capturing information that has not yet been fully quantified. Quantitative investing, by contrast, builds replicable return patterns through statistical regularities, factors, and algorithms, using a wider array of return sources to reduce the uncertainty tied to any single judgment.

At the same time, quant strategies require ongoing iteration. Liang noted that both factors and algorithms face the challenges of return decay and shifting volatility patterns. For multi-asset strategies, what matters most is maintaining a robust framework: avoid over-concentration in any single asset, do not rely on one market environment, and stay vigilant about tail risks.

In today's world of low rates and high volatility, investors' understanding of returns may need to evolve as well. High returns are often accompanied by high volatility, and allocations truly suited for steady capital are not necessarily the most eye-catching assets in the short term. Instead, they are portfolios that can control drawdowns and maintain discipline across various market conditions.

Markets never lack opportunities, and they never lack volatility. The value of a multi-asset, multi-strategy approach lies in offering investors a more disciplined option in complex environments: rather than betting on a single point of success, it seeks a more sustainable equilibrium among returns, risk, and liquidity.