Our FirmOur PhilosophyOur StrengthsOur Services

Asset Allocation

The cornerstone of an investment program is asset allocation, as allocation is the dominant factor impacting both risk and return. IPEX prepares Asset Allocation Studies (“AAS”) that model various allocation scenarios. These scenarios help our clients to understand the potential outcomes of various target allocations and to appreciate the benefit of including different types of investments in their portfolios.

Strategic Allocation

While an account’s precise asset allocation will always vary based upon prevailing market conditions, the account’s strategic asset allocation will still be the largest single factor that impacts investment performance. Although clients always hope that the selection of particular money managers can “add value,” this value is normally added at the margin. It is in the selection of asset classes and investment styles, and in the allocation of the account among these asset classes and investment styles, where the vast majority of investment performance can be found.

Asset Allocation Study

An AAS provides a framework for the asset allocation decisions. An AAS can be viewed as the first step toward taking an account’s investment objectives and translating them into an investment game plan. Investment objectives help define a client’s overall goals. An AAS indicates how the client can position their portfolio to reach those goals.

Allocation Options

The AAS itself is designed to produce an appropriate mix of asset classes and investment styles in a manner that will meet each client’s objectives. The AAS can focus on either the return objectives or the risk objectives. Specifically, what type of risk is the account likely to encounter if it is to achieve a given return, or if the client does not want to accept more than a given level of risk, what type of return can be expected? For each of these issues, the AAS will present a range of asset allocation options.

Criteria and Assumptions

Like most forms of investment analysis, the results of an AAS are dependent upon the criteria and assumptions that are employed. These criteria are both objective and subjective, and can vary substantially from client to client. They relate to two distinct categories: the client’s investment program and the market environment. As an investment consultant, IPEX takes an active role in addressing both sets of issues.


IPEX will often model different allocation scenarios both with and without alternative investments. We utilize this approach to demonstrate that alternative investments can be an important addition to an investment program when used properly to increase diversification and decrease overall portfolio risk.

Fiduciary Responsibilities

In addition to being the dominant factor impacting an account’s performance, establishing a strategic asset allocation is also the most important part of the investment process that is normally under the client’s direct control. While the client cannot control the market or the performance of individual managers, the client can control how their account is positioned. By taking the time to consider the risks and returns associated with various asset allocations before selecting a strategic allocation, a client will have demonstrated that they take their fiduciary responsibilities seriously.

« Back to Our Services