25 June 2019

Customizing Asset-Allocation Strategies

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The financial crisis taught institutional investors many tough lessons including the importance of non-correlated assets in periods of market stress.

New research from Cerulli Associates, the financial analytics firm, suggests that capturing low-correlated and non-correlated asset classes is one of the primary tools large institutional investors are seeking to achieve volatility mitigation. Diversifying sources of income is equally of interest, if not more critical. The upshot for financial services and insurance providers is that insurance asset managers are gaining market traction in the asset management industry by meeting these demands through the creation of customized investment strategies.

Further, product development among leading investment managers appears to be heavily concentrated in the areas of alternative investments and multi-asset class funds. Researchers found more than half (53%) of fund shops surveyed are actively developing new alternative and low-correlation investment products, with an additional 38% considering development. New multi-asset class products are in development at 41% of investment shops, and an additional 24% are considering the development of new offerings in the space.

The third quarter 2014 issue of “The Cerulli Edge - Institutional Edition” examines the unique challenges of achieving low-correlation portfolios in the modern era of global market connectivity. One of the upshots of the research is that Cerulli believes it is in asset managers' best interest to work closely with insurance providers on asset-allocation strategy development.

In addition, several institutional asset managers told Cerulli they are working to have more in-depth conversations with clients on the broad topic of asset allocation, and more specific talks on managing risk-factor exposures.  The firm believes these talks can be a big value-add for institutional asset managers and investment consultants.

Click here to access the full article on Planadviser.


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