CAIA & WTW's TAI Release Practical Guide to Total Portfolio Approach
The CAIA Association, in collaboration with WTW's Thinking Ahead Institute (TAI), has released a new report titled 'From Vision to Execution: How Investors are Operationalizing the Total Portfolio Approach'. The report builds on the 2024 paper 'Innovation Unleashed: The Rise of Total Portfolio Approach' and offers practical insights into the implementation of the Total Portfolio Approach (TPA).
Interest in TPA is surging among large institutional investors. Giants like the Canada Pension Plan Investment Board (CPPIB), the California Public Employees' Retirement System (CalPERS), and AustralianSuper have embraced this holistic approach. They've integrated all asset classes into a unified risk and return framework, employing strategic asset allocation with active risk management, and leveraging advanced portfolio construction techniques to optimize overall outcomes.
The latest report delves into the practical aspects of TPA, including lived experiences, a blueprint for implementation, and the crucial role of governance and culture. It also debunks the myth that TPA is exclusively for large investors. Roger Urwin, co-founder of TAI, describes TPA as 'governance reimagined through a systems-lens', shifting the balance between efficiency and governance.
The CAIA Association's report, based on contributions from over a dozen CIOs, provides a comprehensive look at TPA implementation in practice. It serves as a valuable guide for investors interested in adopting this approach, regardless of their size.
