The 'Diversification Mirage' in the AI Era—New Portfolio Design for Alternative Investments Proposed by BlackRock
The market environment in 2026 presents a vastly different landscape from the past few decades. The return of volatility, wave-like movements in inflation, interest rate levels that have moved away from near-zero, a rapid expansion in capital expenditure due to the AI investment boom, and growing fiscal deficits—these are not isolated changes, but a structural shift that the BlackRock Investment Institute (BII) calls a 'regime shift'.
BlackRock's podcast 'The Bid' featured how to construct portfolios in this environment, with experts explaining four types of alternative investments: private markets, infrastructure, hedge funds, and digital assets.
1. The 'Diversification Mirage'—Why the 60/40 portfolio is becoming harder to rely on
1-1. An era where stocks and bonds move in the same direction
For decades, the '60/40 portfolio'—60% stocks and 40% bonds—was the standard answer for investors. It was based on the premise that stocks provide growth and bonds provide stability, and that the two would move in inverse correlation. However, in scenarios where both stocks and bonds fall simultaneously, this diversification effect does not function.
Jean Boivin of BII pointed out that 'markets are driven by a small number of structural themes—AI and geopolitical fragmentation—and it is becoming increasingly difficult to remain neutral to these.'
1-2. The concept of the 'Diversification Mirage'
Boivin introduced the concept of the 'Diversification Mirage.' This refers to a situation where 'even if things look diversified on the surface, they are actually being moved by the same forces.' For example, even if you think you have diversified into other sectors by avoiding AI-related tech stocks, you may in reality be investing in sectors (such as energy, power, or semiconductor materials) that move depending on the outlook for AI build-outs.
To achieve effective diversification in such an environment, it is necessary to look beyond traditional stocks and bonds. This is why alternative investments are attracting attention.
2. What are alternative investments?—Four categories
2-1. Private markets
According to Cameron Joyce, Head of Research at Preqin, private markets are 'investments in companies and assets that are not listed on stock exchanges.' This includes private equity, private credit, infrastructure, and real estate.
The scale of growth is remarkable, with AUM (assets under management) projected to reach $32 trillion by 2030, up from $11 trillion before the pandemic. However, its most significant characteristic is its illiquidity, and the fact that 'once you invest, you need to hold it for many years' is a trade-off that investors must understand.
2-2. Infrastructure—'If you are bullish on AI, be bullish on power'
Infrastructure is a category that is gaining particular attention among alternatives. Balf Morrison, Head of Listed Infrastructure Strategies at BlackRock, cited utilities such as power, gas, and water, as well as data centers, communication towers, airports, toll roads, and railways as targets for infrastructure investment.
The special significance in the AI era is power. Morrison's statement, 'If you are bullish on AI and believe in its adoption, you must also be bullish on power and utilities. AI cannot be built without data centers, and data centers cannot run without massive amounts of power,' illustrates the perspective of viewing infrastructure as a 'hidden beneficiary' of AI investment.
2-3. Hedge fund strategies—Sources of low-correlation returns
Mike Pile, Deputy Head of the Portfolio Management Group at BlackRock, explained that the characteristic of hedge fund strategies is 'providing sources of returns that have low correlation with traditional stocks and bonds.' By using diverse methods such as long-short strategies and derivatives, they seek returns without depending on the direction of the market as a whole.
As market volatility increases and the dispersion (variance) between stocks grows, opportunities for hedge funds increase. 'Since 2021, market dispersion has increased significantly, creating greater opportunities for hedge funds,' Pile stated.
It should be noted that hedge funds are not monolithic and include diverse strategies. Ron Kahn, Global Head of Systematic Investment Research at BlackRock, explained, 'To continue generating alpha, you need to constantly create new ideas to replace old ones. Data, AI, and machine learning are tools for that purpose.'
2-4. Digital Assets—The Roles of Gold and Bitcoin
Robbie Mitchnik, Head of Digital Assets at BlackRock, categorized digital assets into three types: 'crypto,' 'stablecoins,' and 'tokenized assets.' From the perspective of investor interest, gold and Bitcoin are receiving particular attention.
BlackRock's Jay Jacobs explained, 'What they have in common is their nature as global currency alternatives that exist outside the fiat currency system. They tend to increase in value during periods of heightened economic uncertainty, inflation concerns, and geopolitical risk, and they have a low correlation with stocks and bonds.'
On the other hand, Bitcoin's volatility remains high, and one must be mindful of the recurring cycles of sharp rises and falls seen in 2011, 2013, 2017, and 2022. In terms of access, institutional-grade infrastructure is being established in familiar forms such as ETFs, making it easier to incorporate into portfolios.
3. The 50/30/20 Model—A New Way of Thinking About Portfolios
3-1. From 60/40 to 50/30/20
One direction indicated by BlackRock is a shift from the 60/40 portfolio to 50% stocks, 30% bonds, and 20% alternatives. This is merely an example, and the optimal allocation varies depending on each investor's objectives, risk tolerance, and liquidity needs.
What is important is not the ratio numbers themselves, but the shift in thinking toward 'supplementing with alternatives to achieve diversification and additional sources of return that have become difficult to attain with traditional asset classes alone.'
Conclusion
The core of the perspective presented by BlackRock in 'The Bid' is the recognition that 'a traditional 60/40 portfolio is becoming insufficient in the AI era.' When AI becomes a primary market driver, it is easy to fall into the 'illusion of diversification,' where investments that appear diversified at first glance are actually taking on the same risks. Alternatives such as infrastructure, private markets, hedge funds, and digital assets can be effective tools in such an environment. However, their use is predicated on understanding the trade-offs with inherent risks such as illiquidity, complexity, and volatility.
