We have an Institutional Asset Manager Innovator’s column this week, brought to you in partnership with Elston Consulting, whose Research Editor, Marina Gardiner, details the importance of an all-weather strategy to portfolio management.
Gardiner writes that the original “all weather” strategy was the “Permanent Portfolio” developed by Harry Browne in 1981 consisting of an equal weight allocation to equities, bonds, cash and gold, while the best known “all weather” strategy was pioneered by Ray Dalio of Bridgewater Associates in 1996 and consisted of an equal risk contribution (also known as risk parity) to core asset classes.
In the UK, Targeted Absolute Return (TAR) funds are also often described as “all weather” strategies because they are aiming to give positive rolling returns over a given time period, she writes.
What’s inside an all-weather strategy depends, she says, but what makes it work is positive rolling returns over a given time frame, for example three-five years, limited downside risk and low correlation with both equities and bonds. And Elston believes that the strategy needs alternatives. “We believe it deserves a broader pallet,” Gardiner writes. Read more here.
We also reported on a global study from Carne Group this week which found that there is a fundamental shift in the operational architecture of the asset management industry.
The firm writes that faced with a looming ‘regulatory storm’ and an increasingly difficult recruitment landscape, fund managers are moving rapidly towards a model defined by the aggressive outsourcing of core functions to third-party specialists.
The research reveals fund managers are increasingly moving away from a ‘do-it-all-in-house’ approach in favour of external partnerships that offer the scale, technological sophistication, and jurisdictional reach required to survive in a high-cost, high-scrutiny environment.
More news of change in asset management comes from Broadridge this week, with its report on tokenisation in asset management. According to the inaugural Broadridge Tokenisation Pulse Survey, nearly one-third plan to increase tokenisation investment by 26 per cent to 50 per cent or more over the next two years.
“Across the industry, there is clear recognition that tokenisation has the potential to reshape how assets are issued, traded, financed, and serviced,” says German Soto Sanchez and Mark Nichols, Co-Presidents of Digital Assets at Broadridge. “These survey results underscore both the opportunities and challenges firms face as they seek to connect digital and traditional assets, support governance and controls, and build markets that are efficient, resilient, and trusted.”
Will the asset management industry be quite a different beast in five or 10 years’ time?
Beverly Chandler, Managing Editor, Institutional Asset Manager
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