Trends in Asset Allocation

Rob Leck

Director, Consulting

Rob has over 15 years of experience in financial services, spanning portfolio construction, asset allocation, portfolio management, investment risk, investment systems, quantitative manager, and quantitative specialist supporting the end-to-end investment process, solutions, and performance. He is a senior investment professional with experience across the superannuation, asset management, and treasury spaces as a portfolio manager and quantitative specialist supporting the end-to-end investment process. Prior to joining Cutter, Rob was a senior portfolio manager in QSuper’s Investment Strategy team, with responsibilities across asset allocation, the whole of portfolio construction and risk management, as well as supporting the equities, fixed income, and alternatives teams. Rob holds a graduate certificate in applied mathematics, specializing in computational and discrete mathematics from the Queensland University of Technology. He also holds a bachelor of business and a bachelor of applied science and more recently completed the diploma of superannuation. Rob is a member of the Advisory Committee for the Fixed Income & Credit forum run by the Centre for Institutional Investors (CII).

Jon Chandler

Director, Research

Jon Chandler has 20 years of experience in the financial services industry. Prior to joining Cutter Associates in 2014, Jon was a senior business analyst for State Street Global Advisors (SSGA), where he was involved in a number of projects for the front and middle office, including UAT design and execution for an order management system (Fidessa IMS), the implementation of a web-based due diligence platform (FundInsight), and an enterprise solution to support blended benchmarks. Prior to his project roles, Jon was a principal in fixed income trade operations at SSGA. He has extensive experience with post-trade operations and applications, such as OASYS/CTM, PORTIA, MBSExpert, and FailStation. Jon earned a bachelor of arts in history from the University of Florida and an MBA from Northeastern University.

Recent research assignments and publications include the following:

Alternative Investment Systems
Cutter Benchmarking: Alternative Investments
Cutter Benchmarking: Derivatives and Collateral Management
Cutter Benchmarking: Investment Risk
Cutter Benchmarking: Performance Measurement and Attribution
Derivatives and Collateral Management Solutions
Execution Management Systems
Managed Data Services
Order Management Systems
Outsourcing Solutions
Performance Measurement and Attribution Systems
Portfolio Analytics Solutions
Private Debt
Risk Management Systems
The Evolving Front Office Support Model

Apr 28, 2021

Although many firms look at asset allocation from a capital allocation perspective, this approach doesn’t tell the full story, and this has been evident during times of recent market stress. Traction is now gaining with a different approach.

This paper discusses some of the issues with the traditional capital allocation approach, and the fact that while portfolios constructed with this method appear well diversified, they are not. Some firms are now looking to view asset allocation as a combination of the traditional capital allocation approach and a newer risk allocation approach. This combination provides further insight into the potential diversification benefits by choosing more equally matched building blocks.

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