The Investment process, as highlighted, aims to select managers which achieve synergy within each of the funds, which are positioned to achieve the targeted outcomes and risk objectives as per the multi asset strategy.
A further criteria which is ever important in the increasingly interlinked global investment environment is the asset allocation decision. Tony Bell and Vunani Asset Management appointment are key to asset allocation implementation. The strategic asset allocation decision across global and local bonds, cash and equity classes is made in accordance with the fund’s investment time horizon and the investment objective. Cognizance must be taken of the varying asset class behaviors in different market phases and the asset allocation changed accordingly to reflect the best mix of asset classes in each phase – a concept called regime-shift asset allocation. The vital factor determining the asset allocation framework is whether the strategy is risk mitigating, opportunity seeking or an equilibrium asset allocation. This framework assists in setting up the appropriate investments on the conservative to aggressive scale.
There are a variety of factors which play a role in the short term deviation from the strategic asset allocation strategy. Short-term macro and micro economic risks, liquidity, risk sentiment and political factors are all important in determining whether there is and what the tactical asset allocation overlay will be.