The Rise of Total Portfolio Approach - 36

costs. To embark on this journey, you must genuinely
believe that the benefits of achieving agility outweigh
the associated costs.
Thirdly, please be aware that this will be a multi-year
process that will require ongoing commitment and
pretty much constant adaptation. The change will
require buy-in from your Board, the management
team, and your underlying investment teams and
staff. New processes will need to be implemented and
new behaviours will need to be learned. Leadership
will need to be united in promoting the right culture
to support total portfolio thinking and avoid inherent
selfish behaviours.
Earlier, I mentioned that TPA is not something to be
embarked on lightly, but that doesn't mean I believe
it isn't a pursuit worth undertaking. As with most
things in life, nothing worth having comes easy, but
that doesn't mean it has to be hard. Remember that
TPA is not a specific model with a singular destination,
but rather a range of approaches that can be tailored
to the unique needs of different asset owners,
regardless of their size or complexity. Even if a full
transformation seems challenging, you can begin by
introducing TPA strategies into your portfolio, or partnering
with an OCIO who implements TPA, or simply
fostering a TPA mindset and culture. The key is to embrace
change and take that first step that aligns with
your circumstances.
Still Learning
Recently, I had the privilege of collaborating with a prominent
asset owner in Asia who was actively exploring TPA with the
intention of eventually adopting it to suit their unique requirements.
During this process, we had the opportunity to
interview several of their TPA peers-early adopters of
TPA. One intriguing comment that consistently emerged
from these conversations was the recognition of the
need to " simplify " and find ways to address the complexity
that TPA had introduced. This revelation came as
a surprise to the AO sponsor, who had regarded TPA as
a shining example of innovation to emulate. However,
learning about the practical implementation challenges
was truly eye-opening. I was particularly fascinated
by the peer funds' willingness to acknowledge these
hurdles and the significant measures they had taken
to overcome them, often deviating from their initial approach.
This further emphasised to me that TPA is an
ongoing process that will continue to evolve.
On that note, I strongly encourage all of us to remain
open-minded. We are all still learning, and the future is not
set in stone. TPA is still in its early stages, but its transformative
potential is undeniable, especially when compared to
SAA. We will continue to observe developments in this area
with plans to refresh our research on TPA through a new
asset owner peer study which is planned for next year. We
hope this will provide an opportunity to delve deeper into the
evolving landscape of TPA as well as explore ways to make
TPA more accessible to all asset owners.
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The Rise of Total Portfolio Approach

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