As the institutional investment landscape continues to evolve, traditional models of portfolio management, such as Strategic Asset Allocation (SAA), are being challenged by factors such as market volatility, regulatory shifts, and the growing need for agility. In response, institutional investors, particularly pension funds, are starting to turn their attention to the Total Portfolio Approach – a dynamic, mission-driven framework that treats the portfolio as a unified whole.
Although often discussed in terms of its analytical tools or implementation strategies, TPA’s effectiveness depends on successful governance strategies. Governance defines the decision-making structure, the roles and responsibilities of stakeholders, and the cultural alignment necessary to sustain a long-term investment mission.
At Ortec Finance, our approach to portfolio management has consistently been mission-driven and centered on viewing the portfolio as a unified whole. Our holistic approach is, in essence, a hybrid between SAA and TPA, providing a route that is straightforward to implement.
The analysis we put forth in this report indicates that, among clients who are using some form of a hybrid approach involving SAA, a move towards a full TPA is possible when measures such as governance strengthening, adopting factor exposures, improving liquidity, and implementing risk budgeting practices are undertaken. We explain how institutions can transition from a traditional SAA model toward TPA in a phased, low-disruption way.
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