Asset Allocation

Ope Agbaje, an ABS analyst at CSAM, comments that traditional approaches to asset allocation have tended to focus on packaging together risk and return into one portfolio in the pursuit of ......

However, there has more recently been a gradual shift towards separating out these two key components into ..... strategies, whereby the portfolio is composed of highly risk-controlled 'core' products, combined with more flexible satellite' products that are focused on alpha generation.

This asset allocation strategy is typically composed of a core portfolio that incorporates strategies invested against liquid benchmarks and managed within very ..... risk parameters.

Such core strategies include traditional equity and fixed income products that are either passively or actively managed against benchmarks such as the S&P 500 and the JP Morgan Government Bond Index, ......

The satellite portion allows the investor to select more aggressive and often less liquid strategies that have ..... correlations with the core component and provide the portfolio manager with the flexibility to generate attractive returns.

Within this space, investors have the opportunity to add more specialist asset classes, including absolute return products, hedge funds, commodities and property depending on individual risk ......

Within the fixed income world, a broad range of innovative alpha generating strategies can be employed as the satellite component of a ..... portfolio.

However, while investors are becoming more familiar with asset classes such as convertibles, high yield and emerging ..... debt, a number of new credit products also make attractive satellite components.

One asset class that is beginning to receive more ..... is asset backed securities (ABS).

These products have been developed from a financing technique called ....., whereby a company will pool its assets together to guarantee the issuance of bonds, which are then sold to investors.