An evolution in asset allocation

Higher correlations and lower interest rates demand a different take on asset allocation. Durable portfolio construction addresses today’s many market concerns by going beyond long-only investments, incorporating alternative investments to enhance diversification, and introducing stronger risk controls to address volatility.

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Risk and diversification
Durable portfolio construction aims to produce an all-weather portfolio by incorporating five critical ideas into the investment process:

• Risk is an input, not an output. Risk is often seen as the chance of missing investment opportunity. Instead, investment decisions should be considered from the standpoint of the potential for loss of principal if assets are to endure for the long term.
• True diversification is the goal. With correlations among traditional asset classes rising, we think asset allocation choices must be expanded with alternative investments to provide returns less closely tied to market performance.
• Smarter use of traditional asset classes. Stocks, bonds and cash have to serve a specific purpose in portfolios: Either they have to help reduce risk by lowering correlations or managing volatility, or they have to enhance returns by creating broader opportunities for alpha.
• Professional advice. By filtering market noise and providing perspective on world events, professional advice can be a critical success factor in today’s complex financial markets.
• Courage and conviction. Investing is a long-term process that can be easily derailed by the churning of ideas and emotional decision making brought on by volatile and uncertain markets.

Driving the asset allocation dialogue
It’s our goal to deliver on the promise of durable portfolio construction. Driving discussions with our affiliated investment managers and our partners around the world, Natixis Global Asset Management has identified a whole new range of alternative investments and better strategies for budgeting portfolio risk.

See how it all comes together in your region by choosing a location above.

Newest affiliate brings Indian market expertise

India has one of the world’s largest and fastest-growing economies, and it is forecast to surpass that of China by 2013.¹ Our newest affiliate, IDFC Asset Management Company Limited (IDFC AM), offers a broad range of debt and equity funds that invest in India’s capital markets.

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Access to Indian equities
IDFC AM is a top 10 asset manager by AUM² in India. By offering a wide range of funds across debt and equity asset classes, investors gain direct access to India’s capital markets. The firm’s distribution channels cover 39 cities directly and more than 208 towns indirectly across India.

Mega financing and investment capabilities
India’s immense economic growth is backed by a strong commitment from the government of India.

• The parent company of IDFC AM, IDFC, was founded by the government of India in 1997 for the sole purpose of financing and implementing national priority infrastructure projects.
• India’s growth rate is projected to rise from approximately 7% in 2011 to 9%-9.5% over 2013-15.¹
• The government of India has earmarked $1 trillion to finance its massive build-out of telecom, transport and real estate from 2011 to 2016.³
• At least $500 million of this amount must come from new investment sources.³

IDFC AM, together with Natixis Global Asset Management, serves as an entry point into the rapidly developing private and public markets of India, broadening our reach to investors in select regions worldwide.

Sources:
1) Morgan Stanley report authored by Chetan Ahya, managing director for Asia and India, and Tanvee Gupta.
2) Based on average assets under management (AUM) of $5.6 billion (Rs 28,908 crore) for the quarter ended September 2011, according to the Association of Mutual Funds in India.
3) Inaugural address of India’s prime minister at the Conference on Public-Private Partnership in National Highways on September 12, 2011.

Survey shows effects of volatile times on individuals

Faced with economic turmoil and uncertainty, individual investors in the U.S. and U.K. are more worried about risk than ever before, but they are also eager to find ways to mitigate that risk, according to research conducted by Natixis Global Asset Management.

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The survey asked 795 investors in the U.K. and 463 in the U.S. about their views on the markets, their attitudes about risk and their perceptions of alternative investments.

What is most clear is that, after three years of economic crisis and volatile markets, investors have yet to regain confidence. About half of those surveyed in both countries (52% in the U.K. and 47% in the U.S.) say fear of uncertain returns and market volatility keeps them from investing.

Inside the investor mind
Results show that risk is top of mind for today’s investors, with 70% of U.K. investors saying they now equate risk with loss of principal, and 61% saying they would choose safety over performance. In the U.S., 47% of investors say they limit their level of investments because they fear losing money.

The bright spot: Investors understand, at least in theory, that diversification is important. More than 60% of those in the U.K. know that having different types of investments can lower their risk. More than seven in 10 (73%) in the U.S. believe that it’s important to have different types of investments in their portfolios, and 75% think portfolio diversification is important.

Get the full picture on investors in your region by choosing a location above.