Active Portfolio Construction and Management

Maximizing risk-adjusted rates of return through diversification

We construct multi-manager portfolios that seek to reduce risk and enhance returns. Our portfolio construction process offers diversification to the entire portfolio structure, including:

  • Asset and sub-asset classes 
  • Manager styles
  • Geography
  • Individual securities

We establish relative return and risk expectations for the portfolio over the medium and long term. Through diversification – and a framework for manager selection and allocation/sizing – our goal is to construct a fund with lower relative risk than the individual underlying managers.

Manager and timing allocation

Our strategic view of return sources is our blueprint in the manager allocation process. We allocate managers based on:

  • The level of risk inherent in a manager’s investment strategy
  • The manager’s particular array of sources of excess returns
  • The current macroeconomic environment, as well as the future one

Our goal is to construct a fund with lower relative risk than the individual underlying managers.

Because changing market conditions and active management decisions made by investment managers can alter the portfolio’s characteristics over time, we adjust allocations to investment managers (and the weight allocated to them) from time to time to account for this particular risk.