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When Opportunity Knocks: Flexibility in Asset Allocation

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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. 


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