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The ‘New Classic’ Equity Allocation

19 Pages Posted: 14 Nov 2010  

Xiaowei Kang

Standard & Poor's

Frank Nielsen

MSCI Inc.

Giacomo Fachinotti

MSCI Inc.

Date Written: October 1, 2010

Abstract

The recent financial crisis led many institutional investors to review their asset allocation policies and explore alternative approaches to implementation. MSCI recently held discussions around the world with major pension plans, asset managers, and investment consultants to understand different approaches to implementing equity allocation. Following these consultations, we provide a framework for the implementation of global equity allocation.

Our research suggest that global equity mandates, together with dedicated emerging market mandates and small cap mandates, may be emerging as the “new classic” structure for implementing equity allocation. Investors who need to maintain a home bias can manage the domestic portfolio separately. Such a more top-down mandate structure not only accrues benefits from the potential merits of an integrated global investment process, but it also accommodates segment-specific considerations on manager selection, legacy or mandatory home bias, and different risk and return drivers in various equity market segments.

Keywords: framework for the implementation of global equity allocation, asset allocation policies, integrated, global investment, process, investment management

Suggested Citation

Kang, Xiaowei and Nielsen, Frank and Fachinotti, Giacomo, The ‘New Classic’ Equity Allocation (October 1, 2010). MSCI Barra Research Paper No. 2010-33. Available at SSRN: https://ssrn.com/abstract=1708269 or http://dx.doi.org/10.2139/ssrn.1708269

Xiaowei Kang (Contact Author)

Standard & Poor's ( email )

London EC2M 7NJ
United Kingdom

Frank Nielsen

MSCI Inc. ( email )

88 Pine Street
2nd Floor
New York, NY 10005
United States

Giacomo Fachinotti

MSCI Inc. ( email )

88 Pine Street
2nd Floor
New York, NY 10005
United States

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