Capacity Management for Institutional Asset Owners

18 Pages Posted: 24 Oct 2016 Last revised: 18 Jan 2017

See all articles by Michael O'Neill

Michael O'Neill

Bond University - Bond Business School

Geoff Warren

Australian National University (ANU) - Research School of Finance, Actuarial Studies and Statistics

Date Written: October 23, 2016

Abstract

The management of capacity is considered from the perspective of institutional asset owners. How capacity differs across asset classes is outlined. Investment strategies that offer greater capacity are identified. A discussion of capacity management for multi-asset portfolios highlights how asset owners should manage investments according to their size, focusing on the relation between potential to generate value and capacity. It is argued that optimal scale need not exist for asset owners with the flexibility to adjust where and how they invest as they grow, even though it may exist for specific assets or strategies. Suggestions are also made for managing capacity when investing through external managers, including ideas for detecting and addressing related agency issues.

Suggested Citation

O'Neill, Michael and Warren, Geoffrey J., Capacity Management for Institutional Asset Owners (October 23, 2016). CIFR Paper No. 125/2016. Available at SSRN: https://ssrn.com/abstract=2857967 or http://dx.doi.org/10.2139/ssrn.2857967

Michael O'Neill

Bond University - Bond Business School ( email )

Gold Coast
Australia

Geoffrey J. Warren (Contact Author)

Australian National University (ANU) - Research School of Finance, Actuarial Studies and Statistics ( email )

CBE Building 26C
Kingsley Sreet, Acton
Canberra, ACT 0200
Australia

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