What’s the role of an asset consultant post crisis?

Asset consultants have recently started offering medium-term asset allocation advice, often as a separately priced service.

Watson Wyatt Worldwide calls it “dynamic strategic asset allocation”. Russell Investments calls it “enhanced asset allocation”. Whatever the term, the advice sits between tactical asset allocation at the short end and strategic asset allocation at the long.

But by offering this service the asset consulting fraternity has raised the fundamental question as to what their role is compared with the role of fiduciary funds’ inhouse investment staff, compared with the role of fund investment committees and the role of the plan sponsor or trustee board.

If a fund wants to make medium-term bets away from its strategic ranges, who should make the decisions – specialist managers, consultants, fund staff, investment committees or boards?

Some consultants say they have been offering this advice for years – they just haven’t given it a name.

Sponsored Content

Some fiduciary funds question why consultants did not look to provide this advice prior to the crisis when valuations seemed stretched. Have they simply invented a new class of work for themselves?

Leave a Comment

Sort content by

Peter Bernstein: Risk Inverse

Peter Bernstein, an economic consultant and respected investment thinker passed away on Friday June 5 in New York. Widely regarded as an intellectual giant in the investment circles for his ability to translate complex mathematical models into practical applications, he founded the Journal of Portfolio Management in 1974 and wrote a number of respected books

…as consultant assessment initiates changes to internal equity team and technology

CalPERS has reached its capacity to internally manage equities portfolios and would need to make changes to technology and staff resources if the internally-managed equities program is expanded, according to the outcome of the annual consultant review of CalPERS’ internal equity team by Wilshire Associates. mrec4inarticleinline Sponsored Content scnative1 scnative2 scnative3

Asset class review inspires opportunistic allocation at CalPERS’

CalPERS is considering adopting an “opportunistic” program seeking to profit from substantially undervalued assets across various asset classes and strategies, and will be limited to 3 per cent of the fund’s total market value. mrec4inarticleinline Sponsored Content scnative1 scnative2 scnative3

The future of risk management: How independent should risk management be?

Barry Schachter, research associate with the EDHEC Risk and Asset Management Research Centre and director, quantitative resources, Moore Capital Management believes the current crisis is a catalyst for change in the conduct of risk management because it has challenged the efficacy of the existing risk management model, but simply imposing regulation is not the change

SWFs struck at financial crisis epicentre: $50b in losses from financials

For their biggest public market investments in the last two years, sovereign wealth funds (SWFs) zeroed-in on the most dogged companies in the worst-performing sector: Western financials. These decisions incurred paper losses of $US56.3 billion, accounting for most of their public market losses for the period. mrec4inarticleinline Sponsored Content scnative1 scnative2 scnative3

Working hard for the money

Last year large institutional investors in the US, including the State of Massachusetts Pension Fund and CalPERS, dedicated money to senior bank loans. Amanda White examines the outlook for the sector and talks to group head of ING’s senior loan group, Jeff Bakalar, about whether institutional allocations to the sector have been tactical or strategic.

Previous