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Frontier Advisors

Service Providers Framework 2020

You are in Investment Consultancy » Strategic asset allocation

Strategic asset allocation

IC 07. ESG incorporation into strategic asset allocation

07.1. Indicate whether you incorporate ESG into your strategic asset allocation process.

07.2. Indicate how you incorporate ESG into your strategic asset allocation services.

07.4. Additional information. [OPTIONAL]

Frontier’s Capital Markets and Asset Allocation Team (CMAAT) integrates ESG considerations into the development of its long-term capital market assumptions on an annual basis.  The CMAAT draws on ESG research from across the broader business including Frontier’s sector Research Teams.  ESG factors deemed material (e.g. transition to a lower-carbon economy), are considered alongside traditional factors, (e.g. productivity growth), in determining the long-term expected returns, risk, correlations etc. of major asset classes.  These metrics are key inputs into portfolio modelling which is an important tool in determining a client’s strategic asset allocation. 

 


IC 08. Scenario analysis and/or modelling (Private)


IC 09. Demonstrating value on asset allocation

09.1. Describe how you measure, track or otherwise demonstrate your value on asset allocation activities.

          Frontier maintains an internal Model Portfolio with a long-term horizon which is expected to meet an illustrative return target in keeping with that of a typical client (that maintains an investment objective of a hurdle over inflation). Frontier's Capital Markets and Asset Allocation Team (CMAAT) maintains a register of changes it makes to both strategic and dynamic allocations (medium term, circa one-to-three years) within the Model Portfolio framework. The value-add of dynamic asset allocation calls are reported to and formally reviewed by Frontier's Investment Committee on a periodic basis.  

The performance of our clients is monitored carefully and, acknowledging that asset allocation is a key determinant of long term performance, the returns of the Frontier median client is periodically benchmarked relative to well-known peer universes, most commonly, the SuperRatings Balanced Fund universe.  The relative performance of the Frontier median client is an input into Frontier's internal corporate scorecard, which subsequently is an input into the remuneration of Frontier personnel.
        

09.2. Additional information. [OPTIONAL]

Frontier acknowledges that measurement and determining the success of an asset allocation advisory service goes beyond the return of a client's portfolio.  An appropriate risk profile, exceptional client servicing and value-for-money considerations are some of the other crucial elements which we continually seek to deliver for our clients.  While difficult to capture in a single measure, we do monitor the results of the annual Peter Lee Associates survey of institutional investors to understand how well our broader asset allocation advice is regarded across the industry.  The top line results of the Peter Lee Associates survey are an input into Frontier's internal corporate scorecard, which subsequently is an input into the remuneration of Frontier personnel.  


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