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Where is your scheme heading and by when?
In setting an appropriate strategy, we always start with the simplest solution; we do not believe in complexity for its own sake and look to work with trustees to find the most suitable strategy for their needs.
We then look to build from this starting position, incorporating additional elements within the strategy where these are expected to add genuine value.
We use the concept of a ‘governance budget’ for each scheme. Broadly speaking, this is the amount of resources, in time, expertise and financial budget that the trustees can dedicate to investment matters. The governance budget is crucial in setting the parameters for the strategic investment review.
If the governance budget is small, this would tend to lead to a simple investment strategy involving passive funds which require less monitoring than actively managed funds.
If additional complexity is warranted once expected return, expected risk, implementation cost and ongoing monitoring have been analysed, then additional layers can be added to the strategy.