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Global Invested Capital Market

The concept of a world market portfolio features prominently in many financial theories and models and serves as an important foundation of our asset allocation work for our clients. The world market portfolio is the collection of all assets available to investors in proportion to their relative market value. Therefore, information about the market portfolio:

  • Describes the aggregate portfolio of all investors
  • Describes the investment opportunity set
  • Can serve as a neutral or starting point when establishing long-term asset allocation policies based on circumstances and objectives (e.g., risk, liquidity, time horizon), or views driven by information that is better than everyone else’s (e.g., long-term capital market forecasts, medium-term views)
  • Can serve as a benchmark for strategic asset allocation

In this paper, we estimate how the global market has allocated its collective wealth among competing investment opportunities from a U.S.-based investor point of view. As such, all the estimates are quoted in U.S. dollars. By definition, finance theory assumes that the market portfolio consists of both traded and non-traded assets (human capital, durable consumer goods, etc.). However, it is difficult to construct a good proxy for the market portfolio in the real world that captures all sources of assets. Therefore, we exclude categories like human capital and consumer goods and focus on measuring the values of the capital market securities that make up the opportunity set faced by most investors.

To learn more about the global capital invested market, download the full whitepaper above. 


Disclaimer

This document has been produced by the Investment Policy Services Team of Aon Hewitt Investment Consulting, a division of Aon plc, and is appropriate solely for institutional investors. Nothing in this document should be treated as an authoritative statement of the law on any particular aspect or in any specific case. It should not be taken as financial advice, and action should not be taken as a result of this document alone. Consultants will be pleased to answer questions on its contents but cannot give individual financial advice. Individuals are recommended to seek independent financial advice specific to their own personal circumstances. The information contained herein is given as of the date hereof and does not purport to give information as of any other date. The delivery at any time shall not, under any circumstances, create any implication that there has been a change in the information set forth herein since the date hereof or any obligation to update or provide amendments hereto. The information contained herein is derived from proprietary and nonproprietary sources deemed by Aon to be reliable and are not necessarily allinclusive.

The opinions referenced are as of the date of publication and are subject to change due to changes in the market or economic conditions and may not necessarily come to pass. Information contained herein is for informational purposes only and should not be considered investment advice.

Aon does not guarantee the accuracy or completeness of this information and cannot be held accountable for inaccurate data provided by third parties. Reliance upon information in this material is at the sole discretion of the reader.

This document does not constitute an offer of securities or solicitation of any kind and may not be treated as such (i) in any jurisdiction where such an offer or solicitation is against the law; (ii) to anyone to whom it is unlawful to make such an offer or solicitation; or (iii) if the person making the offer or solicitation is not qualified to do so. If you are unsure as to whether the investment products and services described within this document are suitable for you, we strongly recommend that you seek professional advice from a financial adviser registered in the jurisdiction in which you reside. We have not considered the suitability and/or appropriateness of any investment you may wish to make with us. It is your responsibility to be aware of and to observe all applicable laws and regulations of any relevant jurisdiction, including the one in which you reside.

Aon Hewitt Investment Consulting, Inc. is a federally registered investment advisor with the U.S. Securities and Exchange Commission. AHIC is also registered with the Commodity Futures Trading Commission as a commodity pool operator and a commodity trading advisor, and is a member of the National Futures Association. The AHIC ADV Form Part 2A disclosure statement is available upon written request to:
Aon Hewitt Investment Consulting, Inc.
200 E. Randolph Street
Suite 700
Chicago, IL 60601
ATTN: AHIC Compliance Officer
© Aon plc 2020. All rights reserved.


About Aon

Aon plc (NYSE:AON) is a leading global professional services firm providing a broad range of risk, retirement and health solutions. Our 50,000 colleagues in 120 countries empower results for clients by using proprietary data and analytics to deliver insights that reduce volatility and improve performance.

For further information on our capabilities and to learn how we empower results for clients, please visit aon.mediaroom.com .
© 2020 Aon plc

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