Skip to main content
MENU
Subscribe
  • Subscribe
  • Account
  • LOGIN
  • Topics
    • Alternatives
    • Consultants
    • Coronavirus
    • Courts
    • Defined Contribution
    • ESG
    • ETFs
    • Hedge Funds
    • Industry Voices
    • Investing
    • Money Management
    • Opinion
    • Partner Content
    • Pension Funds
    • Private Equity
    • Real Estate
    • Russia-Ukraine War
    • SECURE Act 2.0
    • Special Reports
    • White Papers
  • Rankings & Awards
    • 1,000 Largest Retirement Plans
    • Top-Performing Managers
    • Largest Money Managers
    • DC Money Managers
    • DC Record Keepers
    • Largest Hedge Fund Managers
    • World's Largest Retirement Funds
    • Best Places to Work in Money Management
    • Excellence & Innovation Awards
    • WPS Innovation Awards
    • Eddy Awards
  • ETFs
    • Latest ETF News
    • Fund Screener
    • Education Center
    • Equities
    • Fixed Income
    • Commodities
    • Actively Managed
    • Alternatives
    • ESG Rated
  • ESG
    • Latest ESG News
    • The Institutional Investor’s Guide to ESG Investing
    • ESG Sustainability - Gaining Momentum
    • Climate Change: The Inescapable Opportunity
    • Impact Investing
    • 2022 ESG Investing Conference
    • ESG Rated ETFs
  • Defined Contribution
    • Latest DC News
    • DC Money Manager Rankings
    • DC Record Keeper Rankings
    • Innovations in DC
    • Trends in DC: Focus on Retirement Income
    • 2022 Defined Contribution East Conference
    • 2022 DC Investment Lineup Conference
  • Searches & Hires
    • Latest Searches & Hires News
    • Searches & Hires Database
    • RFPs
  • Performance Data
    • P&I Research Center
    • Earnings Tracker
    • Endowment Returns Tracker
    • Corporate Pension Contribution Tracker
    • Pension Fund Returns Tracker
    • Pension Risk Transfer Database
    • Future of Investments Research Series
    • Charts & Infographics
    • Polls
  • Careers
  • Events
    • View All Conferences
    • View All Webinars
    • 2022 Retirement Income Conference
    • 2022 Managing Pension Risk & Liabilities
    • 2022 WorldPensionSummit
Breadcrumb
  1. Home
  2. INVESTING & PORTFOLIO STRATEGIES
March 05, 2018 12:00 AM

Active strategies take on new role in outcome-oriented world

Rick Baert
Sophie Baker
  • Tweet
  • Share
  • Share
  • Email
  • More
    Reprints Print

    A number of institutional investors around the globe are preparing to move to a more active stance when it comes to their asset allocation.

    A recent survey by BlackRock Inc. of 224 institutional clients representing $7.4 trillion in assets found a move to increase allocations to active strategies, across equities and private markets. One-fifth of respondents plan to increase allocations to hedge funds in 2018, while 24% are looking to shift equity allocations to active exposures relative to index investments, vs. 16% looking to move in the opposite direction.

    And a number of investors are upping their active exposure selectively.

    Stockholm-based AP7, which has more than 400 billion Swedish kronor ($50.4 billion) in assets, for example, is increasing its active exposure by 10 percentage points.

    The fund is split 90%-10% between passive and active allocations. However, a spokesman for the fund said that during the next 12 to 15 months, in which time the fund will retender for active allocations and is also set to increase its investments in private equity and impact investments — a type of responsible investment strategy — the passive/active split will adjust to 80%-20%. He said equities in general is a focus for embracing active management.

    Other moves have seen investors change their asset allocations to more outcomes-based from traditional asset-class-based allocations.

    The Minnesota State Board of Investment, St. Paul, in December approved plans to allocate its $64.1 billion in defined benefit plan assets to a strategically oriented target asset allocation from its current asset class-based categorization. The goal is to have the categories align more with the intent of the portfolio.

    The new allocation will put between 50% and 75% of assets in capital-appreciating growth investments, including public and private equities; 15% to 30% in income-oriented growth investments, such as investment-grade and multiasset credit; and 5% to 20% will be allocated to protection investments, made up mostly of U.S. Treasuries. Up to 10% will be invested in real return investments, to include core and private real estate; as much as 10% also will be invested in inflation-protection assets such as Treasury inflation-protected securities and commodities; and up to 5% will be allocated to liquid investments such as cash. The reclassification is ongoing.

    Matthew Peron, executive vice president and managing director of global equity, Northern Trust Asset Management, Chicago, said what Minnesota is doing "is a good case study" in asset owners creating allocations based on outcomes as well as asset styles. "We're seeing public plans consider this."

    Other pension funds have changed their allocation classifications to broaden active equity management beyond equities that are publicly traded.

    Contra Costa County Employees' Retirement System, Walnut Creek, Calif., in 2016 created pools of liquidity, growth and diversifying assets in what Timothy Price, chief investment officer of the $8.3 billion pension plan, at the time called a "functionally focused portfolio." The growth portfolio consists of 71% of the total fund assets; the liquidity portfolio, 25%; and diversifying assets, 4%.

    Also, Hartford HealthCare, Hartford, Conn., moved beginning in 2014 to what David Holmgren, CIO, then called "higher-conviction strategies," notably in its 55% growth strategy, which includes private and public equities and a 35% risk-reduction allocation, which includes hedge funds and fixed income. The remaining 10% is categorized as economically hedged assets, including real estate. Hartford HealthCare has $3.3 billion in pension, endowment and other assets.

    Related Articles
    Institutional investors expect more volatility, opportunities for active in 201…
    Large investors plan to increase alternative, active management allocations in …
    Asset owners shift focus to outcomes
    Asset owners shift focus to outcomes
    HFR: Hedge fund launches outpace liquidations for second straight quarter
    Recommended for You
    More funds testing water on crypto-related assets
    More funds testing water on crypto-related assets
    Money managers eager to make leap to opportunity zone investing
    Money managers eager to make leap to opportunity zone investing
    Index investing: Not as passive as you might think
    Index investing: Not as passive as you might think
    New SEC Rule on Fair Pricing Determination Needs Careful Consideration
    Sponsored Content: New SEC Rule on Fair Pricing Determination Needs Careful Consideration

    Reader Poll

    June 6, 2022
    SEE MORE POLLS >
    Sponsored
    White Papers
    Nearing the finish line: Ideas on end-state investing for corporate DB plans
    The Meaning of "Portfolio Intelligence"
    Credit Indices: Closing the Fixed Income Evolutionary Gap
    Forever in Style: Benchmarking with the Morningstar® Broad Style Indexes℠
    Crossroads: Politics, Inflation, & Bonds
    Is there a mid-cap gap in your DC plan?
    View More
    Sponsored Content
    Partner Content
    The Industrialization of ESG Investment
    For institutional investors, ETFs can make meeting liquidity needs easier
    Gold: the most effective commodity investment
    2021 Investment Outlook | Investing Beyond the Pandemic: A Reset for Portfolios
    Ten ways retirement plan professionals add value to plan sponsors
    Gold: an efficient hedge
    View More
    E-MAIL NEWSLETTERS

    Sign up and get the best of News delivered straight to your email inbox, free of charge. Choose your news – we will deliver.

    Subscribe Today
    June 20, 2022 page one

    Get access to the news, research and analysis of events affecting the retirement and institutional money management businesses from a worldwide network of reporters and editors.

    Subscribe
    Connect With Us
    • RSS
    • Twitter
    • Facebook
    • LinkedIn

    Our Mission

    To consistently deliver news, research and analysis to the executives who manage the flow of funds in the institutional investment market.

    About Us

    Main Office
    685 Third Avenue
    Tenth Floor
    New York, NY 10017-4036

    Chicago Office
    130 E. Randolph St.
    Suite 3200
    Chicago, IL 60601

    Contact Us

    Careers at Crain

    About Pensions & Investments

     

    Advertising
    • Media Kit
    • P&I Content Solutions
    • P&I Careers | Post a Job
    • Reprints & Permissions
    Resources
    • Subscribe
    • Newsletters
    • FAQ
    • P&I Research Center
    • Site map
    • Staff Directory
    Legal
    • Privacy Policy
    • Terms and Conditions
    • Privacy Request
    Pensions & Investments
    Copyright © 1996-2022. Crain Communications, Inc. All Rights Reserved.
    • Topics
      • Alternatives
      • Consultants
      • Coronavirus
      • Courts
      • Defined Contribution
      • ESG
      • ETFs
      • Hedge Funds
      • Industry Voices
      • Investing
      • Money Management
      • Opinion
      • Partner Content
      • Pension Funds
      • Private Equity
      • Real Estate
      • Russia-Ukraine War
      • SECURE Act 2.0
      • Special Reports
      • White Papers
    • Rankings & Awards
      • 1,000 Largest Retirement Plans
      • Top-Performing Managers
      • Largest Money Managers
      • DC Money Managers
      • DC Record Keepers
      • Largest Hedge Fund Managers
      • World's Largest Retirement Funds
      • Best Places to Work in Money Management
      • Excellence & Innovation Awards
      • WPS Innovation Awards
      • Eddy Awards
    • ETFs
      • Latest ETF News
      • Fund Screener
      • Education Center
      • Equities
      • Fixed Income
      • Commodities
      • Actively Managed
      • Alternatives
      • ESG Rated
    • ESG
      • Latest ESG News
      • The Institutional Investor’s Guide to ESG Investing
      • ESG Sustainability - Gaining Momentum
      • Climate Change: The Inescapable Opportunity
      • Impact Investing
      • 2022 ESG Investing Conference
      • ESG Rated ETFs
    • Defined Contribution
      • Latest DC News
      • DC Money Manager Rankings
      • DC Record Keeper Rankings
      • Innovations in DC
      • Trends in DC: Focus on Retirement Income
      • 2022 Defined Contribution East Conference
      • 2022 DC Investment Lineup Conference
    • Searches & Hires
      • Latest Searches & Hires News
      • Searches & Hires Database
      • RFPs
    • Performance Data
      • P&I Research Center
      • Earnings Tracker
      • Endowment Returns Tracker
      • Corporate Pension Contribution Tracker
      • Pension Fund Returns Tracker
      • Pension Risk Transfer Database
      • Future of Investments Research Series
      • Charts & Infographics
      • Polls
    • Careers
    • Events
      • View All Conferences
      • View All Webinars
      • 2022 Retirement Income Conference
      • 2022 Managing Pension Risk & Liabilities
      • 2022 WorldPensionSummit