Setting your investment objectives: institutional asset allocation practice

Most institutional investors already have an Investment Policy Statement (IPS) that defines the objectives, investment limits, investment universe and governance of their portfolios. These parameters are not set in stone and must be reviewed periodically given changes in investors’ circumstances, philosophy, long-term expectations and regulations.

In this paper we focus on a key tenet of the Investment Policy Statement, the investment objectives, and analyse whether the following questions may lead to their adjustment:

  • Should Environmental Social and Governance (ESG) concerns working their way through the entire investment system have implications on institutions’ objectives?
  • Faced with the risk of a resurgence in inflation, are absolute return targets dated and should they be replaced with an inflation-linked formula?
  • How to ensure that return targets are achievable, and should the persistence of low interest rates lead to a downward adjustment of return expectations?

You can now read the full whitepaper at the link below