The problem
A large multi-asset fund with EUR 7bn in AUM needed to add diversification beyond its core equity and bond allocation, but faced strict fee and liquidity constraints. Most alternatives solutions either exceeded the TER budget, lacked daily liquidity, or concentrated risk in a single strategy type.
The challenges
Building a diversified alternatives allocation that could operate within a weighted average TER limit of 80bps, maintain majority daily or weekly liquidity, and genuinely diversify rather than simply add another correlated return stream.
What we built
A liquid alternatives allocation representing 15% of the fund, blending private assets including infrastructure, an internally managed equity option strategy, and a diversified portfolio of liquid alternatives across four sub-categories: macro and tactical, infrastructure, alternative premia, and alternative fixed income.
Manager selection designed to access a broad range of lowly correlated strategies within the fee and liquidity constraints.
The outcome
A 15% allocation that diversifies the fund’s equity and bond risk without breaching its operational constraints and has delivered on its diversification objective across multiple market cycles.