Focus Sections » OTHER FOCUS SECTIONS » SUB-ADVISORY BUSINESS

Dynamic asset allocation strategies are now widely used by investors as a way to maximise exposure in equities, while maintaining a good level of protection. During the last 10 years, investment banks have launched sophisticated alternatives to the basic Constant Proportion Portfolio Insurance structure (CPPI), which dynamically allocates capital between riskier assets such as equities and safer assets such as government bonds, with the objective of recovering the initial investment at maturity. When investors put ?100 in a CPPI structure, a certain proportion of it is invested in a zero coupon bond.This zero coupon bond will be redeemed at 100 per cent maturity and will thus enable investors to recover their entire initial capital in the most adverse market scenarios. A multiple of this available part is invested in more risky assets. Everyday the difference between the zero coupon bond price and the NAV structure (eg the addition of the zero coupon bond and the risky asset investments) is closely monitored and the amount invested in the riskier assets is adjusted.

PWM aims to examine the role of banks, wealth managers and fund houses as asset allocators, to ascertain which asset classes are best suited to the sub-advisory model and which are best managed in-house, to estimate the optimum mix between internally managed and outsourced assets, and to evaluate changing distribution models in the light of depolarisation. To do this, we have invited a selection of wealth managers and investment providers to share their sub-advisory secrets with us

Interest rates have remained very low for many years. Investors were able to achieve good returns when rates declined, but what should they do now? Will rates continue to decline, or will they rise? Many investors want to invest in fixed income, no matter what the prevailing market conditions. ING Investment Management’s new Target Return Fixed Income Strategy can provide a fitting solution