The Rise of Total Portfolio Approach - 16

Driving this was a desire to improve on the traditional
approach of a board setting a strategic asset allocation
and delegating the implementation of that to
management, with the associated risk that the objective
gets forgotten. What emerged was a model that
involves both the board and management engaged in
an ongoing dialogue about how to achieve the target
return.
Board And Agency
So, what is important to successfully deliver joined-up
whole-portfolio investing? A Board and investment
professionals who collectively buy in to investing with
a whole-portfolio mindset; data and insights to allow
an informed whole portfolio perspective; knowledge
sharing within the investment team; trust, professional
empathy, and a culture of collaboration to bring
being joined-up to life. The governance structure is
the means to embed the joined-up whole-portfolio
approach.
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A joined-up whole-portfolio approach is also supported
by a strong and trusted relationship between the
Board and investment staff whereby the Board are
'partners' in the investment process and partners in
the decisions (as opposed to decisions being made by
an investment team acting as agents of the Board under
delegation).
This governance model acknowledges the Board
as the owner of the portfolio and a partner with the
agency in achieving its aims. For this reason, a joinedup
whole-portfolio approach demands that a significant
amount of the Board's time in meetings is spent
discussing the state of the world, current positioning
of the portfolios, and the relative attractiveness of
different opportunities.
Optimisation Over Efficiency
Each of the elements of the joined-up whole-portfolio
approach are designed around optimising the total
portfolio-as opposed to efficiency of operations or
efficiency for the individuals in the process. It can be
a demanding process for the individuals involved because
it requires an ongoing exchange of information
and sharing of insights.
The Rise of Total Portfolio Approach

Table of Contents for the Digital Edition of The Rise of Total Portfolio Approach
