Achieving Investment Excellence

PART ThreeImplementing the Investments

Part III concerns the implementation of the investment cycle. Parts I and II have laid the groundwork, defining the purpose, mission and strategy of a pension plan and how this leads to a risk and return framework to achieve the strategy. This part focuses firmly on the implementation of the strategy, which goes through a regular cycle for trustees. The investment plan is created on a yearly basis, and includes the asset allocation, investment styles and benchmarks. The plan is also reviewed—“Are we doing the right thing?” During the year, implementation of the investment plan is monitored on a quarterly, monthly or even weekly basis, as part of continuous execution-and-monitoring, focusing on “Are we doing things right?”

The design of Part III follows the implementation of the investment cycle, and as with the other chapters, stays true to the trustee's perspective: what do you need to do to set out the strategy, to be in control, and to focus on what really matters in order to achieve the fund's goals? As in the earlier parts of the book, we distinguish between the limited choices that produce 80% of the returns, and potential add-ons that might get you above 80%, but which will require a lot of skill and energy.

Part III Topics Include:

• How to formulate and judge capital market expectations;
• How to build an asset allocation and investment ...