Strategic Client Solutions

We employ a rigorous optimisation process based around mean variance and Monte Carlo modelling. Our modelling looks at various risk/return statistics in both absolute terms and also relative to the reference portfolio or benchmark (if relevant) using forward looking expectations for asset class returns, risk and covariance.

Other approaches we may take include: focusing on balance across a broader array of risks beyond simply volatility (e.g. drawdown); focusing on a specific goal, such as income or inflation sensitivity; or building a portfolio around underlying risk factors (credit risk, equity risk etc.) rather than simple asset classes.

We are able to model various "Reference Portfolios" based on (ultra) long horizon asset assumptions, to assist clients in their ongoing governance and monitoring of achievement versus environment and expectations. This needs to be clearly articulated in line with a client’s investment approach and understanding of risk and opportunity.

Short-term governance considerations focus on the terms of the mandate, how they are implemented, and the ongoing monitoring processes. Longer-term governance requires an assessment of whether the premise for the current portfolio allocations has changed, with potential for customisation to ensure the decision making is guided by “what matters”.

We have a long history of providing liability hedging and managing liability aware portfolios. Our insurance heritage and experience of managing annuities also naturally extends to liability driven investment (LDI) and cashflow driven investment (CDI) solutions for pension schemes. At the heart of our liability-aware investing philosophy is a belief that the best way to serve our clients is through a dynamic and agile investment process that puts their interests “front and centre”. We recognise that all clients are unique and work with them to meet their specific requirements with bespoke solutions.

We stress test our assumptions (including thematic views), consider statistical significance of optimal portfolios versus subjective alternatives, run alternative risk models (Monte Carlo, pure risk, forward looking scenario analysis, cash-flow matching etc.), and consider bottom-up opportunities and implementation issues (including FX). Our systems use a mix of fundamental and statistical relationships to produce credible joint behaviours across a range of different return drivers and calibrate to reflect the Global Strategy Team’s views on expected returns.

We determine target asset allocation relative to framework and agree guidelines and time frames for ongoing evolution of that allocation. We focus on forward looking estimates of return and aim for efficient diversification. Quantitative optimisation sets the framework with qualitative insight to account for a wide range of peripheral factors which pure reliance on ‘the data’ may miss. We take shorter term views for tactical asset allocation, looking to valuation mismatches and shorter term trends to exploit. This can be implemented through trading or derivative overlays depending on most appropriate and efficient method available.

Our Global Strategy team leads our work on deriving expected returns , making use of economic forecasts, implied market views and assumptions about historical trends and mean reversion. Our analysis is informed by varied research inputs, including global economic modelling, investment bank and institutional forecasts. This provides us with a well-informed and differentiated view of the macro-economic outlook and drivers of asset class returns.

We operate a specialist Multi-Manager Strategies team focused on long-only third party manager research, plus a dedicated Alternative Investment Strategies team, covering hedge fund strategies, liquid alternatives, and alternative risk premia. In addition, our private market solutions team can provide research, insight and selection spanning private equity, real estate, infrastructure, natural resources and private debt.

Our role as stewards of our clients’ assets requires the consideration of material ESG factors. We are committed to this approach as we believe that ESG integration can be a key component in the identification and mitigation of risk. We build ESG considerations into our investment processes and, where relevant, see this as an area of potential long term value creation. We also work with clients to help them develop their own policies, process and procedures around ESG and responsible investing.

We work with clients to assist in the production of fund performance and attribution, risk analytics and portfolio data. This may include regulatory reporting, voting and engagement reports, scheme level monitoring (e.g. funding level, solvency levels), scheme level developments (e.g. covenant changes), and assessments of the impact of such data.

We aim to be thought leaders and have made available multiple education programs to our clients in line with their requirements. Sharing best ideas and resources are an essential part of a long-term partnership, and we believe that continuous client training programmes are one of the cornerstones for maintaining strong relationships.