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Strategic Asset Allocation Decisions

The Best Asset Allocation Papers - Q2 2018

Don't put all your eggs in one basket - unless it's this particular basket of white papers.  Here we have a selection of the most interesting strategic and tactical asset allocation papers submitted to Savvy Investor in recent months.

S&P questions the inclusion of the S&P 500 in policy benchmarks, pointing out the benefits of non-traditional indices. AB and Wellington uncover unique multi-asset opportunities. BlackRock explains how to replace derivative positions with ETFs. Stick your beak out and see for yourself!

Savvy Investor

Optimizing Asset Allocation: Hedged Equity (Swan Global Investments, 2018)
Swan Global Investments speaks about optimal asset allocation within hedged equity portfolios, showing how to use options to both hedge an underlying position and to help pay for the cost of placing the first set of hedges.

Science and Art: A Framework to Unlock Multi-Asset Opportunities (AB, 2017)
(For compliance reasons, this paper is only accessible in North and South America)
A multi-asset portfolio can help to manage strategic allocation decisions, as long as the particular multi-asset solution is integrated, dynamic, and unconstrained.

IQ Magazine: Life After Easy Money (SSGA, 2018)
SSGA's Investment Quarterly magazine begins with an overview on the forces set to drive corporate performance as the age of easy money draws to a close. Other sections include US tax cuts, inflation risk, intangibles, and the trade.

BlackRock's 2018 Guide to ETFs and Derivatives
(For compliance reasons, this paper is only accessible in the USA)
Due to lower costs, efficiency, tailored exposures, flexibility, and other reasons, ETFs have assumed a more prominent role within portfolios, frequently being utilised alongside more traditional derivative products.

Can Absolute Return Protect Against Volatility (Intech Investments, 2018)
(For compliance reasons, this paper is only accessible in certain geographies)
Intech shows how absolute return strategies can improve portfolio efficiency and protect gains in the face of increased volatility. Focusing on outcomes instead of categorizations is an important part of the analysis process.

Reaping the Returns: 25 years of EMD investing (NNIP, 2018)
(For compliance reasons, this paper is only accessible in North and South America)
In the past 25 years, emerging market economies have improved greatly, and as a result, opportunities within the emerging market debt market have evolved significantly over that same time period. 

Why China A-Shares, Why Now? (William Blair, 2018)
The opportunity to invest in China A-shares has recently arisen, due to the opening of the Chinese equity markets to foreign investors.  As a result, William Blair believes institutional investors should consider allocating more to China.

Sector by sector: Fidelity International Analyst Survey 2018
(For compliance reasons, this paper is only accessible in the UK & Europe)
Fidelity presents a sector by sector survey of analysts on how companies are approaching 2018 and how they are positioning businesses for the year ahead.

Transition Management Explained (Russell Investments, 2017)
(For compliance reasons, this paper is only accessible in the EMEA region)
Managing portfolio transitions well can be a significant source of savings for any large portfolio, so it should be of no surprise that interest in transition management services has risen recently. Russell Investments elaborates.

Narrowing the Return Gap: The Right Direction (Wellington Management, 2018)
How does an investor bridge the gap between a high return target and low market expectations for returns? Wellington management presents a series of ideas to that are intended to set investors on the right path.

Policy Benchmarks: Diversifying Equity Allocations (S&P Dow Jones Indices, 2018)
S&P Dow Jones Indices explores ways to provide a more balanced equity exposure within a policy benchmark by diversifying away from market-cap-weighted indices and into one of several alternatives.

Asset Allocation Framework for Illiquid Private Assets (PGIM, 2018)
(For compliance reasons, this paper is only accessible in the USA)
PGIM discusses a new asset allocation framework that is designed to aid in determining the optimal mix between liquid and illiquid assets for CIOs.

A Decade Post-Crisis, Fundamentals Tell a Different Story (PineBridge, Mar 2018)
Is the next recession on the way? The data underlying PineBridge’s Capital Market Line would lead one to the opposite conclusion, instead pointing to increasing opportunities to capture alpha through asset allocation.

Multi-asset: Four investment ideas for a siloed world (Wellington, 2018)
Is it necessary to organize the world of investments into silos in order to allocate assets? Some opportunities may actually cut across the traditional silos of asset classes (EM/DM, etc), as long as we are open to pursuing them.

Balanced portfolios: Safer without bonds? (Hermes IM, Jan 2018)
Over the past 20 years, investors have banked upon the complementary behaviour of stocks and bonds and the stability of this correlation.  Unfortunately, this period of stability is likely an exception to the rule.

The complete downside protection toolkit (Fidelity International, Feb 2018)
(For compliance reasons, this paper is only accessible in the UK & Europe)
Downside protection tools can help investors to manage risks, but each tool has its own use. Knowing the pros and cons of each is an important part of being able to decide which ones can best safeguard their portfolio.

Stocks, Bonds and Causality (PIMCO, Mar 2018)
PIMCO discusses the correlation between stocks and bonds, how this relationship changes during periods of market stress, and the development of an econometric model to test a variety of scenarios.

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