http://www.saai.com/index.php/the-month-year-in-review/ Sat, 17 May 2008 15:52:30 +0000 http://wordpress.org/?v=2.0.7 http://www.saai.com/index.php/the-month-year-in-review/#comment-857 Wed, 12 Mar 2008 18:59:45 +0000 http://www.saai.com/index.php/the-month-year-in-review/#comment-857 In answer to your question "Can Investment Grade FI managers add risk adjusted value with active management. Yes, as we are all aware asset class returns move up and down with the markets for instance in the first quarter (thru 3/5/08) preferred securities were up over 6.5% on the Merrill (P0P0)indices. I am sure several managers beat their various benchmarks during that time period. As most of us will recall from the Brinson study of the 80's asset allocation is over 90% of the recipe for your return or lack there of. Proper asset allocation is the key finding low correlated asset classes is sometimes the most difficult part of the equation. Once you put these non-correlated assets into a properly asset allocated portfolio with the clients goal in mind.You have achieved the first part of the answer. Then you select the managers on the basis of their risk adjusted return (most clients look at alpha). Yes, there are managers whom add risk adjusted value thru active management. Sometimes they are just harder to find. In answer to your question “Can Investment Grade FI managers add risk adjusted value with active management. Yes, as we are all aware asset class returns move up and down with the markets for instance in the first quarter (thru 3/5/08) preferred securities were up over 6.5% on the Merrill (P0P0)indices. I am sure several managers beat their various benchmarks during that time period. As most of us will recall from the Brinson study of the 80’s asset allocation is over 90% of the recipe for your return or lack there of. Proper asset allocation is the key finding low correlated asset classes is sometimes the most difficult part of the equation. Once you put these non-correlated assets into a properly asset allocated portfolio with the clients goal in mind.You have achieved the first part of the answer. Then you select the managers on the basis of their risk adjusted return (most clients look at alpha). Yes, there are managers whom add risk adjusted value thru active management. Sometimes they are just harder to find.

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