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A Closer Look at Tilts and Assets

There’s an interesting survey over on Top1000 today that details how Chief Investment Officers’ views have changed since the global financial crisis. Of particular interest to me was the sudden shift in attention by CIOs towards tilts, tactical asset allocations and overlays.  Let’s investigate…

There’s an interesting survey over on Top1000 today that details the changing views of Chief Investment Officers since the global financial crisis. I found it an interesting (and quick) read that offers good insights into, as Amanda White puts it,“...the extent to which the 2008 crisis has had an effect on the behavior of internal investment teams, their outlook and corresponding asset allocation.”

The survey brings together responses from SWFs, pensions, endowments and insurance funds worth roughly $5 trillion. In short, the sample appears to be solid so it’s worth paying attention.

Anyway, of particular interest to me was the sudden shift in attention by CIOs towards tactical asset allocation and tilts. Here’s a blurb:

“More than half of the respondents have increased their focus on tactical asset allocation or hedging overlays since the 2008 crisis. Some of the funds surveyed had implemented factor-based asset allocation and an active hedge overlay and, in particular, had moved towards a more dynamic asset allocation approach.”

That’s interesting. But I actually think these data under-report the sheer number of funds that are either executing or simply considering TAAs, tilts or overlays. To me, it feels like this is on every CIOs mind I talk to these days. Why? It’s perceived to be a good way to earn incremental return on risk over what a fund could do by passively implementing a policy-driven asset mix.

Anyway, in case you missed it, my AIMCo colleagues and I wrote a paper on how AIMCo has developed its GTAA since the crisis. (Note: This is a revised version, so thanks to all the feedback from readers). Download it here. And then go read the survey over at Top1000.

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