Bespoke modelling: Tailors risk & portfolio management for Asia’s large asset owners

Willis Towers Watson advocates a bespoke modelling framework to answer those “what if” questions when reviewing or changing portfolios.
Bespoke modelling: Tailors risk & portfolio management for Asia’s large asset owners

Sophisticated asset owners, such as sovereign wealth funds, often need to address the concerns and questions raised by their internal and external stakeholders. The 2018 Willis Towers Watson’s Global Investment Matters report highlights how a bespoke modelling framework can help answer very fund-specific “what if” questions when reviewing portfolio allocations or proposing new portfolio strategies.

Willis Towers Watson has developed a framework to help asset owners in Asia evaluate their portfolio in a forward-looking manner, which a number of existing clients are already using. The framework integrates capital market views and longer term assumptions, and produces a suite of portfolio analytics. As a result, asset owners are now able to answer important questions that they could not have answered in the past.

Paul Colwell, director, investments at Willis Towers Watson said “Our sovereign wealth clients find the framework useful to evaluate whether they are positioned suitably to make, for example, regular payments to government, or to fund social programmes over a long period of time. Often these are critical elements of their mission. Our bespoke modelling framework is also used by investors to communicate the overall risk and return profile of their investment strategy, as well as proposed portfolio changes for internal and external stakeholders. We’re now also seeing other asset owners showing interest in the model, including insurance companies and endowments.”

Colwell said the framework is flexible and can be tailored to each fund’s specific requirements. Asset owners can use the framework for different purposes, for example:

  • To understand how portfolio mixes and changes in economic fundamentals affect forward looking expected returns on a short and long term basis
  • To understand the appropriateness of their existing asset allocation in the context of portfolio efficiency, robustness, medium term appropriateness and risk and liability measures.

Willis Towers Watson’s bespoke modelling framework includes a tool called a portfolio scorecard, to help investors compare “what ifs” for different portfolios and to assist them in assessing the relative merits of each scenario. It also enables comparisons across different portfolios against certain objectives so that specific portfolio ideas can be supported and verified quantitatively.

Portfolio scorecard: proposed portfolio versus current portfolio

Colwell said the use of bespoke modelling is a response to demands from global asset owners to better understand their portfolios on a forward-looking basis. This trend means many asset owners now use third-party standard or bespoke modelling tools.

Willis Towers Watson’s 2018 Global Investment Matters also explores other topical investment issues including:

  • Incorporating megatrends into portfolio and business planning: Tom Brooke-Smith, asset allocation strategist, delves into why investors and business leaders should incorporate a megatrend framework into their decision-making process, as well as identifying areas of opportunity and key risks that require hedging.
  • Five ways for investors to find true value: Craig Baker, global chief investment officer, examines how investors should focus on value for money, not solely headline fees. Asset owners need to ask the right questions to discover where real costs lie and how they can address these costs.
  • The case for delegation just got stronger: Pieter Steyn, head of delegated investment service, UK, examines the growing shift toward delegation within the pensions space as many boards seek to manage risk and returns.

For further information, please contact: [email protected]

Paul Colwell or Andy Siu at Willis Towers Watson

Paul Colwell
Andy Siu






The contents of this article are for general interest. No action should    be taken on the basis of this article without seeking specific advice.


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