PM for Institutional Investors

Question 1

Canada Model

Answer 1

Characterized by high alternatives exposure, active management, and insourcing.

Pros: High value-added potential and development of internal capabilities.

Cons: Potentially expensive and difficult to manage

Question 2

Norway Model

Answer 2

Traditional style characterized by 60%/40% equity/fixed-income allocation, few alternatives, largely passive investments, tight tracking error limits, and benchmark as a starting position.

PROS: Low cost, transparent, suitable for large scale, easy for board to understand

CONS: Limited value-added potential.

Question 3

Endowment Model

Answer 3

Characterized by high alternatives exposure, active management and outsourcing.

Pros: High value-added potential

Cons: Expensive and difficult to implement for most sovereign wealth funds because of their large asset sizes