Updating our asset allocation models

Today we are putting the finishing touches to our updated asset allocation models for the final quarter of 2013.

Because we believe the bulk in variance of long-term investment returns come from an asset allocation strategy, we place a great deal of importance on this asset allocation within our Investment Committee.

Making tactical adjustments to our strategic asset allocation positions is our attempt to add additional value.

We also attempt to add value through fund selection.

This quarter we have taken the decision to outsource the management of our asset allocation models to a third-party, Distribution Technology.

They offer a powerful and sophisticated asset allocation model which is supported by a dedicated and expert Financial Analytics Team.

Like us, they accept that accurately predicting the future is not possible, but combine forward-looking and past performance analysis to more accurately forecast the most likely future outcomes.

This leads to the construction of efficient, practical and investible asset allocation strategies which can be readily aligned with client risk tolerances.

The asset allocation models are reviewed quarterly, updated only in the event of a significant market event. They are then updated once a year at the end of Q3 based on the latest Capital Market Assumptions data.

What this means for our clients is precise risk management and investment recommendations which are well suited to their objectives, risk attitude and capacity for risk.

Our quarterly investment outlook will become a quarterly investment report, with a greater focus on discussing pertinent economic and investment market developments. It will continue to be published here on our website each quarter.

We are always happy to discuss this in more detail with our clients and present additional information about the asset allocation setting process used to determine these models.