Profiles and Analysis
In this section…
Investment strategies
GEOGRAPHICAL
ALLOCATION 17-19
“Can we be sure that a
greater appetite for exposure
to emerging markets has not
blurred the traditional approach
to regional or country-specific
allocation?” Gary Shepherd takes
a look at whether investors should
still invest by region or country
given the globalisation of markets
Manager profile
DAVID JANE 22-23
“There is no correlation
between academic outcomes
and how good a fund manager
they are; there is a lot of
correlation between their
personality traits, their ambition
and determination” M&G’s
multi-asset fund manager, David
Jane, is pragmatic and realistic
about what he wants from both the
funds he runs as well as the equity
team he manages
Viewpoint
TACTICAL ASSET
ALLOCATION 20-21
“There is a view, given the
treacherous markets of late,
that this long-term strategic
asset allocation approach
may have some flaws” Neal
Underwood looks at the traditional
endowment model of static, multiasset
allocation and asks whether
a more tactical approach is now
needed
A time for careful tactics
There are plenty of investment theories being trashed
after the events of the past year, yet very few replacement
ideas being put forward. The traditional endowment model
of long-term, static, multi-asset allocation used by the
likes of Yale and Harvard universities in the US is one that
many fans of passive investment hold up as the be-alland-end-all.
Yet there are those who argue that a more tactical
asset allocation process is now needed to react to any
recurrence of the extremes of the past 18 months – Yale
and Harvard both lost 25% in the year to the end of June
last year.
It seems that the idea of multi-asset portfolio
management is a given; the disagreements come with
how to measure correlation and how best to mix and
match the assets to provide the right risk/return.
■ Over the ten years since 1995, Harvard University
reduced its domestic equity exposure from 38% to
15% at the same time as increasing its absolute return
exposure to 12% from zero.
■ Real assets grew from 13% to 23% and are expected to
remain at this level through to next year at least.
■ Its fixed income exposure grew by 5% from 22% in
1995 and is forecast to reverse this trend and fall to
13% next year.
16 PORTFOLIO ADVISER [www.portfolio-adviser.com] JANUARY 2010
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