The 100-Year Portfolio: A State of Mind Rather Than an Allocation

What You Need to Know

We fully recognize the irony of attempting to make statements about ultra-long horizon investing when the possibility of artificial general intelligence (AGI) and climate change imply a greater level of path uncertainty than that experienced perhaps ever in the period of modern investing. This is not to mention the abrupt geopolitical shift we are seeing that forces one to strip away the “recency bias” of the past 75 years of US-led order.

Nevertheless, being able to plan for ultra-long horizons is important. There has been an increase in the share of assets run by family offices and sovereign wealth funds, investors that often tend to have a multi-generational horizon.

The long run is not just a concatenation of short runs; the process of investing should differ. In fact, it is governance rather than a particular asset allocation that is probably the main attribute of such long horizons. We think that ultra-long horizon investing differs from more normal horizon investing in several ways.

Additional Contributors: Alla Harmsworth, Robertas Stancikas and Maureen Hughes

Let’s start this note by addressing the irony. There has been more change in the geopolitical and economic order over the last year than has happened in most decades. That’s before one entertains the prognostications of the techno-determinists that tell us we will invent AGI within a decade, at which point a break will happen in the development of human civilization unlike any other. There is also the question of the likelihood of planetary warming unlike any other in the Holocene, the effects of which on economics and politics are hard to forecast. How is it, with that tumultuous backdrop, that one can with equanimity entitle a note with a 100-year horizon? We argue that it matters all the more with the increased share of invested assets managed by family offices and wealthy individuals, and also by sovereign wealth funds, because more assets will be invested with a view toward genuinely long horizons spanning more than one generation. With the strategic investment regime changing, investors with long horizons need to consider what this means for them.

But what does it mean to have a 100-year portfolio? Does the phrase inherently possess any internal logic? We think it is more a statement of governance, benchmark and process rather than necessarily a specific allocation per se. After all, one is not going to suggest that one is unable to rebalance within 100-year horizons. So, attending to the process of governance is probably the key conclusion of such a horizon. 

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