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“Named must your fear be before banish it you can” – Yoda
If you want to get better at anything you must name what it is you want to get better at. If you need to fix something you need to name what needs fixing. If you need to improve then name what needs improving. You get the picture.
Investors want to implement investment decisions effectively, improve returns, and get better investment outcomes for their clients. If we fail to meet these goals, how do we identify the problem? What were the obstacles to our success? Though tempting, we cannot always blame our investment managers for failing to generate alpha. Is there something that we can improve in the OCIO investment process? Are there ways to improve investment outcomes through operational and implementation effectiveness?
Step one is to clearly outline the investment process. How do we get our investment data, how often do we get our data, and what is the data flow across various stages of our investment process? Do we have the right data, at the right depth, at the right time, in front of the right people? These are questions that help us identify the steps in our investment process at a more granular level. Once we identify the various stages of an investment process, no matter how trivial they may seem, we can name the hurdles we face in each step to get the desired outcome.
Are we spending too much time gathering data? How long does it take to make an investment decision & implement that decision into your portfolio? What are the opportunity costs of that delay? Is the asset allocation implemented effectively? Do we have an audit trail of our investment decisions? Is there room in our investment policy to make more dynamic asset allocation? Are we monitoring individual portfolio allocations effectively for guideline violations? What about factor exposures? How can we monitor hundreds of investment accounts with a small team? Can we use technology to improve our investment processes? What are some areas that we can improve in our multi-asset, multi-manager fund structure? You will discover lots of questions. High quality questions yield the most effective investment process.
“Named must your process be, before improve them you will.”
