When Opportunity Knocks: Flexibility in Asset Allocation

It is widely accepted that the asset allocation decision is one of the most important—if not the most important—decisions dictating an investor’s success (and risk). Allocation requires a long-term outlook. The constraints of a formal asset allocation policy should not, however, impede investors’ ability to implement attractive opportunities or innovative ideas as they arise.

We recommend investors consider an Opportunity Allocation as a way to be nimble and take advantage of market opportunities. An Opportunity Allocation can overcome the rigidity of a formal asset allocation design and provide flexibility in implementation. This approach isn’t for every investor, since the investor’s governance and circumstances can strongly influence the merits of the approach. But where it’s a good fit for the investor, an Opportunity Allocation can be compelling.

The Concept

An Opportunity Allocation is not an investment in and of itself; rather, it is part of an investor’s governance structure that helps facilitate the execution of great ideas in the portfolio, including bank capital relief. An Opportunity Allocation is flexibility built into the investment policy statement to enable investors to make investments that may not fit within a traditional asset allocation construct.

Download the whitepaper above for more insights on the reasons to create such policy flexibility. 


Disclaimer

This document has been produced by the 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 in respect of 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 non-proprietary sources deemed by Aon to be reliable and are not necessarily all inclusive.

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