With the economic and investment landscape evolving rapidly, some institutional asset owners are championing a new model for ensuring that asset allocations continue to remain aligned with their investment objectives.
While a Strategic Asset Allocation (SAA) approach continues to be the most common approach, the Total Portfolio Approach (TPA) is garnering increasing attention. An SAA enables investment teams to be structured in asset class silos and measured on their delivery of alpha, providing significant governance benefits. But by shifting the primary ownership of the strategic portfolio, from the governing board to the CIO, TPA investors aim both to be more focused on long-term outcomes and more nimble in the face of changes in the investment landscape.
This paper explores the extent to which allocations are indeed more dynamic for TPA investors, and whether this has led to better outcomes. The resulting governance model is typically more challenging for Boards to oversee. We examine how boards are meeting this challenge and also observe how intermediate models, which retain some of SAA’s advantages while adjusting allocation governance to enable more dynamism, can be attractive for some investors.
-
Investing Amidst Macro Uncertainty & Sentiment-Driven VolatilityPGIM Multi-Asset Solutions' Second Quarter 2025 Outlook.
Read More
-
Income Returns of Infrastructure: Model Specification & EstimationWe examine the key components of our infrastructure equity income return models and review our model parameter estimation procedure closely.
Read More
-
Direct Infrastructure Equity: Performance, Return Attribution, & Inflation ResilienceWhat drives infrastructure returns? We dive into returns, valuation and inflation sensitivity of infrastructure investments and compare them to public assets.
Read More
