Global Asset Allocation Strategy
SMART Asset Allocation Division provides global investment advisory services to
company-sponsored mutual funds and discretionary managed account services for
high net worth individual and institutional clients including foundations,
pension funds, endowment
funds, corporations, institutions and businesses, tapping SMART's
expertise in fixed income securities, equities, private equities, hedge funds
and real assets. Based on a thorough and systematic confidential client
profiling, the Asset Allocation Division initially ascertains the client's
risk-return profile, investment objectives, future consumption requirements,
investment period and incorporates them into an Investment Policy Statement (IPS). Our
asset allocation strategies are futuristic and proactive. They aim
at achieving superior returns at reduced risk. We incorporate
various lead indicators for expected parameter (return and risk)
smoothing, rather than depending on long-term return and risk
parameters of various investment products for asset allocation
within a single period framework (Harry Markowitz's mean-variance
optimization). We believe that asset allocation strategies are
constantly influenced by the dynamism of various economies and
their markets such as rising oil prices, long-run interest
rate conundrum, looming inflation, the predicament of rising US
deficit, increasing current account surpluses among emerging
countries as against increasing current account deficits among
industrialized countries, and the baby-boomer syndrome in the
industrialized countries. |
SMART's asset allocation process is rigorous across various regions/countries
and asset classes. Driven by the investment strategy theme, the Asset Allocation
Division applies various securities market quantitative models for global
investment positioning.
The asset allocation strategy adopted by our Asset Allocation Division
is based on the results of quantitative modeling and back-testing over the
long-run. They are proven and appropriately benchmarked. We look for active
alphas across various regions/countries/assets within the various asset
classes.
We
also deviate from the popular hypothetical belief that markets are
efficient as widely used in traditional capital asset pricing
models (Sharpe and Lintner's Capital Asset Pricing Model).
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In a theoretical
framework, an efficient market and an efficient portfolio may
exist, but not in the real world, as investors have various
constraints and preferences. Strategists and investment managers have their own views on different assets or asset classes’ performance, which are dynamic
and change over time. Pension funds, endowment funds, insurance companies and mutual funds, though may aim at achieving superior and stable
performance, may be constrained by their home-bias, risk
preferences and asset-liability matching criteria. Similarly, individual
investors may be constrained to operate within a restricted
market. All these result in price anomalies
across various regions and asset classes. Though markets are
static at any given point in time, investors are always looking
for better investment opportunities and discover price anomalies
that may best fit their constraints and risk preferences. Our asset
allocation strategies are client-focused and incorporated into customized
Investment Policy Statements.
Should you require further information on our asset allocation strategy
or would like to design an Investment Policy Statement or have specific asset
allocation or product
development requirements, kindly contact us at smartam@smartinternationalholdings.org.
Related Areas: Global
Investment Strategy, Performance Measurement-
Benchmarking and Attribution
Analysis, Product
Development- Investment Products and Managed Accounts, Wealth
Management Strategy. |