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Additional Aspects of Asset Allocation

The Best Recent Papers on Asset Allocation

Asset allocation decisions affect multiple aspects of the investment process. These include strategic decisions (perhaps determining a benchmark asset allocation, based on long-term return forecasts and risk parameters), tactical decisions (such as how best to navigate the present business cycle) and procedural considerations of the best ways to implement the choices that have been made by investment committees and portfolio managers. 

The papers below have been divided into five sections, covering long-term return forecasts, economic and geopolitical considerations, strategic allocations to commodities, implementation processes, and risk management.

asset allocation


ECONOMICS and MARKETS


Guide to Recessions: What to look out for and how to prepare (Capital Group, 2019)

For compliance reasons, this paper is only accessible in certain geographies

Recessions can be difficult to predict. This Capital Group e-brochure discusses five of the top economic indicators for gauging recession risk, as well as asset allocation recommendations for recessionary periods.

Consumer Trends in India: Jai hind (Wellington Management, 2019)

On their recent grassroots research trip to India, two of our emerging markets investors met with millennial consumers to learn more about their buying preferences and aspirations. They discovered a strong desire to bridge tradition with modernity, a trend with a number of investment implications.

The trouble with capitalism (Aviva Investors blog, 2019)

For compliance reasons, this paper is only accessible in certain geographies

As more countries begin to lean towards populism and populist leaders, Aviva Investors asks the question - is the world falling out of love with capitalism and free-market economics?

Looking Forward, Looking Back: 10 Charts After 10 Years (AB blog, Mar 2019)

For compliance reasons, this paper is only accessible in North America and South America

The 10 charts presented here show just how much global financial markets have changed in the past decade, while graphically depicting megatrends like the rise of populism, energy supply dynamics, ESG, and the increase in global debt levels.

Late-Cycle Investing: Survive and Thrive (Neuberger Berman, 2019)

For compliance reasons, this paper is only accessible in certain geographies

This paper describes four principles that investors can use to both survive and thrive, as they attempt to actively invest within a late-cycle environment.


OIL and GOLD


Oil in 3D: The Demand Outlook to 2050 (Barclays, 2019)

Barclays looks into the global reliance on oil reserves over the next several decades, considering three possible oil consumption scenarios and their resulting implications.

Gold as a Strategic Asset in 2019 (World Gold Council, Mar 2019)

For compliance reasons, this paper is only accessible in certain geographies

The authors describe in detail the four fundamental roles that gold can play in a portfolio and examine the potential risk/return benefit that would accrue to a pension fund portfolio upon increasing their gold allocation.


PROCESS and IMPLEMENTATION


Invesco Vision Portfolio Management Decision Support System (2019)

For compliance reasons, this paper is only accessible in certain geographies

In this excellent, 70 page document, Invesco sets out processes for modelling assets & liabilities, quantitative portfolio construction and portfolio analytics.

In Turbulent Times, European Institutions Turn to ETFs (Greenwich Associates European Study, 2019)

For compliance reasons, this paper is only accessible in certain geographies

This year's Greenwich Associates ETF Study reveals rapid growth in ETF investments by institutional asset managers in Europe, as well as discretionary wealth managers and insurance companies. Investors repositioned portfolios in response to volatility in 2018 and continued to shift from active towards passive strategies.


LONG TERM RETURN FORECASTS


Capital market assumptions Q2 2019 (Invesco)

For compliance reasons, this paper is only accessible in certain geographies

Invesco provides four distinct papers covering their quarterly update on long-term estimates for global asset classes. These are based on a 10-year time horizon and currency adjustments have been made (through interest rate parity calculations) for USD, EUR, GBP, and CHF based investors.

Multi-Asset Long View (DWS AM, Feb 2019)

For compliance reasons, this paper is only accessible in the United Kingdom

The Long View contains the long term capital market assumptions that underpin portfolios managed by DWS's Multi-Asset and Solutions Group.

2019 Long-Term Capital Market Expectations (Franklin Templeton)

For compliance reasons, this paper is only accessible in the EMEA region

Franklin Templeton sees global stocks as having greater performance potential than global bonds, due to continued global growth. Additionally, they forecast stronger returns for emerging markets over the next 7 years.

Long-Term Return Expectations - H1 2019 (Baillie Gifford)

For compliance reasons, this paper is only accessible in the United Kingdom

Baillie Gifford's Multi Asset Team sets out their viewpoints on which asset classes will likely deliver over a timeframe of 10 years and beyond.


RISK MANAGEMENT


The Stock-Bond Correlation: Where to from here? (Axioma, May 2019)

Axioma focuses in on the correlation between equities and bond yields, reviewing their historical relationship and discussing their more recent convergence.

How to Make Equity Allocations More Resilient (Intech, 2019)

For compliance reasons, this paper is only accessible in certain geographies

Intech examines the why and how of defensive equity investing, with a particular emphasis on low volatility strategies. The authors examine the benefits, the risks and the case for defensive equity strategies.

Managing Risk in Turbulent Times (LGIM, Apr 2019)

For compliance reasons, this paper is NOT accessible in the United States and Canada

Solutions strategy managers at LGIM elucidate some of the steps that defined benefit pension schemes can take when navigating volatile markets.

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