The Need for Investment Solutions

Investment management is justified as an industry only to the extent that it can demonstrate a capacity to add value through the design of dedicated and meaningful investor-centric investment solutions, as opposed to one-size-fits-all manager-centric investment products. After several decades of relative inertia, the much needed move towards investment solutions has been greatly facilitated by a true industrial revolution triggered by profound paradigm changes in terms of (1) mass production of cost- and risk-efficient smart factor indices; (2) mass customisation of liability-driven investing and goal-based investing strategies; and (3) mass distribution, with robo-advisor technologies. In parallel, the investment industry is strongly impacted by two other major external revolutions, namely the digital revolution and the environmental revolution.

In this fast-moving environment, EDHEC-Risk Institute positions itself as the leading academic think-tank in the area of investment solutions, which gives true significance to the investment management practice. Through our multi-faceted programme of research, outreach, education and industry partnership initiatives, our ambition is to support industry players, both asset owners and asset managers, in their efforts to transition towards a novel, welfare-improving, investment management paradigm.

EDHEC-Princeton Goal-Based Investing Indices
Retirement Income
November 2019 Returns (%)
Zone, Retirement year
Not adjusted
Cost-of-Living-adjusted
US, 2023
0.39
0.35
US, 2028
0.39
0.35
US, 2033
0.27
0.22
US, 2038
-0.01
-0.08
US, 2043
-0.49
-0.59
US, 2048
-1.29
-1.40
US, 2053
-2.26
-2.37
US, 2058
-2.86
-2.90
INVESTMENT MANAGEMENT WITH PYTHON AND MACHINE LEARNING
Newsletter EDHEC Risk
Executive Education
ETF Smart Beta Factor Investing

 

Risk Management as the Key Source of Added Value in Investment Management

Investment management in the new era can be defined as the art and science of efficiently spending institutional or individual investors’ dollar and risk budgets to help them achieve their meaningful goal-driven objectives (for individuals) or liability-driven objectives (for institutions), subject to a number of regulatory constraints or otherwise. Whatever the context, meaningful investment solutions are in fact invariably based on three fundamental sources of added value, each reflecting one particular form of risk management technique : (1) the use of an efficient risky performance-seeking portfolio (PSP); (2) the use of an efficient safe liability-hedging or goal-hedging portfolio; and (3) the use of an efficient allocation strategy for efficient risky and safe building block portfolios.

 

Diversification

The risky portfolio should be efficient at harvesting risk premia across and within asset classes: It’s all about diversification!

>More information

Hedging

The safe portfolio should be efficient at matching risk factor exposures on the asset and liability sides: It’s all about hedging!

>More information

Insurance

The allocation to the efficient risky and safe portfolios should secure investors’ essential goals while generating a high probability of achieving their aspirational goals: It’s all about insurance!

>More information

Academic Roots

EDHEC Bond Risk Premium
Bayesian Nets for Stress Testing

EDHEC Risk Expertise

ESG Factors and Sustainable Investment Solutionst
"Flexicure" Retirement Solutions - A part of the Answer to the Pension Crisis?

Practitioner Reach

Ostrum Bond Portfolio Optimization
Results of the 12th EDHEC European ETF Smart Beta Survey

News

Lionel Martellini invited to join the Institutional Investors’ Committee of Paris EUROPLACE
13-01-2020

Lionel Martellini invited to join the Institutional Investors’ Committee of Paris...

Lionel Martellini, Director of the EDHEC-Risk Institute has been invited by Valérie Baudson, Chairman of the Institutional Investors’ Committee to join the Institutional Investors’ Committee of Paris EUROPLACE. Since 12 December 2019, Lionel serves as the only representative from the academic world. The Paris financial marketplace plays a key role in financing the economy. The association aims in...
A Year in Research: What were EDHEC-risk’s top 10 most read articles of 2019?
03-01-2020

A Year in Research: What were EDHEC-...

As we enter a new decade, EDHEC-Risk Institute takes a look back at the most read articles of 2019, covering a diverse range of topics that are at the heart of its expertise, including : sustainable...
EDHEC-Risk Institute and FirstRand launch a research chair to design and implement welfare-improving investment solutions for institutions and individuals
02-01-2020

EDHEC-Risk Institute and FirstRand...

EDHEC-Risk Institute and FirstRand Limited are partnering for the first time to launch a three-year research chair entitled “Designing and Implementing Welfare-Improving Investment Solutions for...

Events

23 Jun

The Advances in Asset and Factor Allocation Seminar: Factor Investing,...

10 Fleet Place, Ludgate,...

Register

> See more Events

Our stats

55 000
Citations in worldwide trade publications
520
Papers published
2 300
Participants trained
150 000
Newsletter readers