Through the Eyes of an Asset Allocator

Damned if you do, damned if you don’t…..

Imagine being in the hot seat, having control over all that money! Wielding the power, having the ultimate say over who gets a ‘yes’, and who gets the dreaded ‘no thanks, it’s not right for us right now’…..

Jealous, me? Hell no! It’s a tough job and one that I wouldn’t want thank you very much…..

The problem is that almost by definition, in order to achieve the returns, you also take on the risk – its’ all about how you quantify and manage that risk, and how that sits with the rest of your portfolio. None of this is helped of course by interest rates still being at historic all-time lows, which makes cash a difficult place to be….The problem is, that the money needs to get allocated, that’s the job in hand, but all the while trying to preserve portfolio quality and manage exposure.

Portfolio construction then becomes all the more important when you consider correlation, overall liquidity, exposure to real assets, managed accounts, traditional hedge funds, private equity funds, as well as direct holdings.

So, back to asset allocator’s dilemma – where to get the returns whilst still being comfortable with the risk. One option is to look at new asset managers with lower levels of AUM, or to look at back-tested track records that are by necessity shorter in length than normally desired. Or to allocate to a managed account over which the investor has some control or veto, or other special terms and conditions.

There are literally hundreds of credible funds such as these all competing for the same dollars. So the question then becomes, how do the funds get themselves noticed and how does the Allocator determine which ones to look at?

Now let’s look at what asset allocators are looking for, and look at ways for funds to present themselves.

  • How does your fund differentiate itself? What are the key points?
  • Imagine your fund is the same as many others, why would anyone choose yours? Put those reasons on the first page! Sometimes it not about performance, its about people and trust – capitalize on that if you have it.
  • Place the arresting information upfront to grab the attention – make them want to read on….
  • Put any data and facts in an easily found, digestible and sequential format – make it easy for them to put ticks in the boxes

This all sounds logical and easy enough, and yet why is it so rarely well executed?

It’s a hard job being an asset allocator, why not make their lives just a bit easier – its damned tough raising capital too, (we all know that!), and we can make that job easier as well...