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The bespoke solutions journey
Client needs drive our Global Investment Solutions business. Our journey together starts with a commitment to understanding the client’s business, the outcomes they are trying to achieve, their specific challenges and the regulatory environment that they operate in.
Nowhere is our brand promise – Your Success, Our Priority – more evident than it is in our Global Investment Solutions business.
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Manager research and selection
Solutions in action
A dynamic return asset allocation solution
A new multi-asset solution for Italian retail investors via one of their life assurance subsidiaries.
Columbia Threadneedle Investments partnered with a global financial services firm to design and deliver an innovative and new multi-asset solution for Italian retail investors via one of their life assurance subsidiaries.
From the outset, it was clear from the risk limits and return targets that a dynamic approach to portfolio construction would be required, but the best fit only emerged after a series of client engagement and design iterations. These enabled the client to identify where to make the best trade-off between various desired characteristics and allowed our Global Investment Solutions team to fine-tune the proposal to fully meet the client needs.
The collaborative engagement started with an open discussion between the client and our client centric investment solution designers: our initial understanding suggested that our high conviction multi asset model delivery approach would be suitable. This includes a dynamic portfolio construction process which combines multi-asset investing and manager selection capabilities and that focuses on delivering risk adjusted returns, with well diversified portfolios which only hold desired allocations. In addition, we also presented a risk-based allocation process. These shared a common portfolio construction philosophy but ultimately the dynamic return asset allocation driven approach was identified as providing the most appropriate fit to the client needs.
As well as determining and designing the right strategy, we also discussed several delivery approaches – from allocation through an existing actively-managed multi-asset fund through to allocation using passive funds. The final agreed structure involves an allocation to a range of single- and multi-asset funds from Columbia Threadneedle as building blocks. The strategy is delivered to the client as a model portfolio, governed by an investment committee within our firm and with portfolio allocations being managed by the client directly.
The interactive client discussions played a crucial role in ensuring the final portfolio met multiple objectives (risk, return, transparency, reporting, marketing etc). Collaboration across multiple functions within Columbia Threadneedle (asset allocation, solutions design, reporting, distribution) mirrored the collaboration between us and the client.
Asset allocation for a US healthcare provider
Improving the management of a defined benefit plan
A US healthcare provider was investigating how to improve the management of its defined benefit (cash balance) plan. It sought a partner able to deliver an end-to-end solution, from portfolio design through to implementation and reporting.
Our initial review quickly concluded that a traditional duration-matching approach would be inappropriate, but that multi-asset allocation would better meet a multiplicity of client objectives. Based on our capital market assumptions, we designed a set of strategic asset allocations targeting a range of returns. The portfolios incorporated alternative investments alongside global equities and global fixed income, with the allocation to fixed income providing the required duration match.
The construction and implementation of these duration-aware, object-oriented portfolios needed the expertise of our manager selection team, to deliver open architecture solutions. We therefore built portfolios using the most appropriate managers, both internal and external as building blocks for each asset class, taking into account the client’s requirements. The blend was able to account for the interactions between managers’ positionings by leveraging our rigorous approach to manager research and selection. The ongoing implementation and review of the portfolio is controlled by our manager selection team, with customised outcome-oriented reporting tailored to the client’s needs.
Asset allocation for an insurance provider
Reviewing range of assets with profits funds
Columbia Threadneedle has several strategic partnerships with insurance companies. Among the services we provide, a regular review of the strategic asset allocation (SAA) of numerous portfolios is needed, be they for unit-linked funds, with-profit portfolios or balance sheet assets.
These SAA reviews involve a broad range of considerations and high degree of client interaction. Regulatory capital charges and asset-liability interactions must be considered alongside the risk and return views (capital market assumptions) for the various potential asset classes. After putting together an initial proposal, we engage with the client and enter an iterative process where we discuss, challenge and implement any feedback to capture additional or evolving client requirements.
In a recent case, we reviewed the range of with profits funds for a client. They had traditionally held a large fraction in domestic assets, representing 75-90% of the portfolio risk, and the client was keen to diversify while maintaining tight constraints on the regulatory capital charge. The final solutions were more globally diversified in both equity and fixed income components of the portfolio, with the capital charge essentially unchanged. The iterative process involved taking into account feedback and perspectives from the client and portfolio managers in each market while maintaining the target improvements in agreed quantitative metrics.
Customised equity solution for a wealth manager
Reviewing range of assets with profits fundsColumbia Threadneedle Investments has broad-based relationships with several wealth managers. Selection, delivery and monitoring of specific products along with consistent investment performance is clearly of primary importance. Our multi-asset services include regular strategic asset allocation (SAA) reviews and we offer design of bespoke solutions where off-the-shelf products do not meet client needs.
We managed a multi-asset portfolio for one of our clients, part of which is invested in a global equity income strategy. Due to the income tilt and the constraints originally imposed by the client, this strategy had large style biases (value/growth and high dividend) which contributed significantly to the active risk of the portfolio and the client was concerned about the impact of these style factors on performance.
We explored with the client several different ways to design a solution which would rein-in these unwanted factor contributions. Following extensive engagement and in-depth analysis, we determined that the best route would be to run a factor-completion portfolio alongside the existing portfolio. The factor-completion portfolio is designed to reduce the style biases of the global equity income strategy resulting in lower active risk that is more aligned with the active manager’s stock selection decisions.
In addition, we helped the client to restructure the overall portfolio to incorporate an index-tracking portfolio alongside the active components. This further reduced the active risk and the costs faced by the client.
Meet the team
Stuart Jarvis joined Columbia Threadneedle Investments in 2019 and works as a Quantitative Research Director in the Global Investment Solutions team. He focuses on designing customised investment solutions and leverages the expertise of the firm’s investment management as well as multi-manager research capabilities.
Before Columbia Threadneedle, Stuart was a member of the member of the Portfolio Construction Research team within the BlackRock Investment Institute, responsible for developing the core principles and intellectual property that underpin BlackRock’s approach to portfolio design, such as capital market assumptions and optimisation tools. He previously spent 12 years in BlackRock’s solutions business, working with a wide variety of clients to construct portfolios to meet their investment outcome needs, taking into account liabilities, capital constraints and investment market conditions. Prior to that, Stuart was a pensions consultant at Hewitt, Bacon & Woodrow.
Stuart holds a Masters degree in Mathematics from Cambridge University and a DPhil degree in Mathematics from Oxford University. He is also a Fellow of the Institute of Actuaries.
David Weiss is vice president, head of sub-advisory management at Columbia Threadneedle Investments. In this role, Mr. Weiss leads the team responsible for the selection and oversight of a multi-manager platform employing over three dozen external investment managers. Mr. Weiss joined Columbia Threadneedle in 2015 bringing 16 years of investment management experience, having previously worked at Lincoln Financial Group where he was a portfolio manager and CIO of Lincoln Investment Advisors Corp (LIAC). In his prior role, Mr. Weiss was responsible for manager research, portfolio management, and overall investment strategy for Lincoln’s proprietary fund family, which included co-managing Lincoln’s suite of risk-managed funds. Mr. Weiss received a B.S. in Management from Plymouth State College and his MBA from Boston University Graduate School of Management. In addition, he holds the Chartered Financial Analyst® designation.
Lorenzo Garcia (based in London) is responsible for developing and growing the firm’s investment solutions business within EMEA and APAC. He is also responsible for Portfolio Construction and Research at a Global level for Investment Solutions. In this role, Lorenzo helps deliver the firm’s investment capabilities and expertise to meet our clients’ investment requirements, leading the design and implementation of solutions and working closely with our global investment and distribution teams to build client-focused products.
Lorenzo joined Columbia Threadneedle after more than 12 years’ with Blackrock Investment Managers where his most recent role was Head of EMEA Institutional and Retail Portfolio Management, ETF and Index Investments, overseeing in excess of £370 billion within 170 portfolios. Prior to that, Lorenzo was Head of Blackrock’s EMEA and APAC Multi-Asset Risk and Quantitative Analysis team, responsible for the oversight of International Multi-Asset and Client Solutions Mandates and working extensively with clients in relation to portfolio construction, risk analysis and risk advice.
Lorenzo holds a BA (Hons) in Business Management and Administration from the University of Murcia, Spain, as well as a Diploma in International Business from University College of Dublin, Ireland. He also holds the Chartered Financial Analyst designation as well as the Financial Risk Management designation awarded by the Global Association of Risk Professionals.
William Landes is global head of Investment Solutions for Columbia Threadneedle Investments. He joined one of the Columbia Threadneedle Investments firms in 2014 and has been a member of the investment community since 1985. Previously, Dr. Landes was senior managing director and chief investment officer of the multi-asset business for Gottex Fund Management. Prior to that he was chief executive officer at 2100 Capital Group. Dr. Landes started his investment career at Putnam Investments as chief investment officer of global asset allocation, global currency and quantitative equity. He was also the firm’s global head of investment research. Dr. Landes received a B.S. in Economics from the University of Findlay, a Masters in Economics, and a Ph.D. in Finance from University of Cincinnati.