The case for Global Tactical Asset Allocation

• A high information ratio
• Over 9 year's expertise in managing GTAA overlays on large mandates
• Currently manages overlays on assets of over £80bn

During the 1980s and 90s, equity investors enjoyed strong returns with very little downside volatility. Buy and hold strategies tended to generate the best results while more active approaches to asset selection seemed unnecessary.

History suggests that this was a very unusual period and during the current, more volatile, decade, attention has once again focussed on the benefits of actively managing a fund’s asset structure.

The current environment is characterised by low liquidity, increasing volatility and is driving investors to seek enhancements to portfolio returns. Against this background Global Tactical Asset Allocation (GTAA) strategies are playing an increasing role in portfolio management.

GTAA seeks to evaluate the attractiveness of a range of asset classes (bonds, equities, currencies) across all regions and countries, and to position a portfolio to benefit from pricing inefficiencies.

Morley’s GTAA analysis incorporates economic research, proprietary asset valuation models and advanced portfolio construction to exploit all mis-pricing opportunities and consistently generate returns across equities, bonds, cash and currencies.

Using scenario analysis, portfolios are constructed that perform robustly across a range of different circumstances. These are preferred to portfolios that excel under the most likely scenario but fail badly if events do not unfold as predicted.

Our highly experienced Asset Allocation Committee challenge and finesse the output from the modelling work to ensure that it is consistent with the strategic view and that portfolios are as robust as possible.

This capability is now available to smaller schemes in the Aviva Investors Absolute TAA Fund which was the first UCITS III GTAA investment fund.