| Standard investment strategies that are not customized, including separate and commingled accounts, mutual funds, hedge funds, closed-end funds, manager-of-manager funds, hedge funds of funds, and private partnerships. 90% to 95% of institutional investor assets are invested in vehicles in this category. | | Investment strategies designed to solve a specific problem for an institutional investor. Many off-the-shelf investment solutions such as many liability-driven investment approaches, target-date strategies or multiasset class solutions require some customization during implementation, but otherwise offer a fairly standard investment approach. Most "solutions" available within the institutional investment arena fall into this category. Customized investment solutions may be developed into off-the-shelf investment solutions if money managers think they can be standardized and are scalable enough to attract more institutional investors. | | Customized solutions tend to be product-based approaches to meet a specific investment need. The investor, consultant and money manager work together to develop a customized solution, but once the strategy is set and running, collaboration tends to diminish or stop. Strategic partnerships, on the other hand, often are driven more by client needs. They involve greater collaboration and information sharing and a commitment by the money manager to an intense, sustained and consultative collaboration and dialogue; knowledge transfer; and shared academic-level investment and and capital market research. | | Arrangements in which institutional investors give fiduciary management (including investment decision-making power) of all or part of a portfolio to a money manager or investment consultant. Many mandates are managed to meet a return or liquidity objective. A decision to outsource usually is more about resource allocation and plan governance than a specific investment solution. |
