Asset allocation is not child's play, but PanAgora Asset Management Inc. has made a game out of it.
The Boston-based company in 1997 created the interactive Asset Allocation Game not for Christmas gift-giving, but as the basis for client workshops. The National Council on Teacher Retirement, Austin, Texas -- which represents teacher's retirement systems -- played the game at its national conference last year; and Lehman Brothers Inc., New York, has included it in their management training program for three years.
The objective of the game is to give plan sponsors, endowment and foundation trustees and other fund executives experience in creating, maintaining and defending an optimal asset allocation.
Teams initially assume the role of investment staff for hypothetical investment plans as diverse as the Show-Me-the-Money Football Star Trust; the Metropolis, Any State, USA public plan; the Young-Spunky Company; and the Established-Controlled Corporation.
Each team receives a summary of its plan's history and current circumstances so it can conduct an asset allocation review and get started with changes. Using computer simulation, teams can test and revise their recommendations if their initial allocations show a potential for disaster under changing economic patterns.
The fun really starts in the afternoon of the all-day workshop, when participants change roles and become the boards of other pretend plans for an investment committee meeting. Teams are expected to present their asset allocation changes to their boards and to explain and defend their decisions. Cutting-edge reporting technology allows the team to create performance reports and analysis to defend their positions.
The most successful team, designated by popular vote of their workshop peers, is rewarded with both the thrill of victory and special prizes.
