Asset allocation Capital market assumptions | Q1 2025
Invesco Solutions develops capital market assumptions (CMAs) that provide long-term estimates for the behaviour of major asset classes globally.
14 April 2025
Article
DB pensions: Where next after ‘peak complexity?
16 January 2023
Over the last 30+ years, pension trustees have added significantly to their investment portfolios:
- introducing additional sources of return by asset type, geography, and investment vehicle, and
- using a wider toolset to manage and control risk
Overall, the results have been positive, but at the price of greater complexity. It has stretched governance resources and operational processes and has increased costs substantially.
One of the key issues arising from these changes has been the increase in the number of parties involved in the overall management of the portfolio.
This approach has been based on a belief that a best-in-class line up of fund managers can deliver consistent alpha over and above a diversified set of betas.
The cost of this model in terms of higher fees has always been a point of debate, with many schemes opting for passive management in more ‘efficient’ markets. This has helped drive down asset management fees in those areas significantly over the years.
But the cost of complexity in terms of the additional governance, liquidity and operational risks have not always been well examined.
The turmoil in gilt markets in September-October 2022 was a stark reminder that complexity introduces risks that can more than offset the performance benefit of a best-in-class strategy. This has profound implications for pension schemes, investment managers, investment consultants and other service providers, as it highlights that de-risking is about more than reducing investment volatility.
In this outsourcing and risk management paper we consider:
- Outsourced investment approaches: A full menu
- The need for resilience: Risk reduced or simply outsourced?
- Considerations for best practice
- The case for partial outsourcing
- Future-proofing is essential, be that under full or partial outsourcing
Related insights
Asset allocation Tactical asset allocation
Welcome to our Tactical Asset Allocation hub. Here you’ll find a selection of the most recent research from Invesco Solutions. Read our latest analysis that covers market strategy and opportunities across various asset classes.
8 April 2025
ETC Monthly gold update
Gold had a remarkable month, gaining 9.3% after breaking through US$3,000 and ending March at US$3,124. Economic and geopolitical uncertainty drove the gold price higher ahead of the trade tariffs scheduled to be announced on 2 April. Discover insights into the key macro events and what we think you should be keeping your eyes on in the near term.
8 April 2025
Investment risks
-
The value of investments and any income will fluctuate (this may partly be the result of exchange rate fluctuations) and investors may not get back the full amount invested.
Important information
-
Where individuals or the business have expressed opinions, they are based on current market conditions, they may differ from those of other investment professionals and are subject to change without notice. All information as at 31st December 2022 unless otherwise specified.
This article is marketing material and is not intended as a recommendation to invest in any particular asset class, security or strategy. Regulatory requirements that require impartiality of investment/investment strategy recommendations are therefore not applicable nor are any prohibitions to trade before publication. This material should not be considered financial advice. Any reference to a ranking, a rating or an award provides no guarantee for future performance results and is not constant over time.
