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 mass production (of cost- and risk-efficient smart factor indices), mass customisation (of liability-driven investing and goal-based investing strategies) and 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 and virtue 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
September 2018 Returns (%)
Zone, Retirement year
Not adjusted
Cost-of-Living-adjusted
US, 2023
-0.47
-0.52
US, 2028
-0.18
-0.21
US, 2033
0.42
0.40
US, 2038
0.96
0.96
US, 2043
0.96
0.96
US, 2048
0.96
0.96
US, 2053
0.96
0.96
US, 2058
0.96
0.96
Executive Education
FT Ranking
Executive Education
Executive Education

 

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 wealth-/income-/consumption- or liability-driven objectives, subject to regulatory constraints. Addressing this challenge involves institutional and individual asset owners (or their investment managers) efficiently using a holistic risk management framework known as liability-driven investing or goal-driven investing. Whatever the context, meaningful investment solutions are based on three fundamental sources of added value: (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!

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Hedging

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

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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!

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Academic Roots

EDHEC Bond Risk Premium
Bayesian Nets for Stress Testing

EDHEC Risk Expertise

From Investment Products to Investment Solutions
Perspectives on Retirement Investing

Practitioner Reach

Ostrum Bond Portfolio Optimization
EDHEC-PRINCETON Goal-Based Investing Indices

News

Lionel Martellini speaking on the application of goal-based investing to retirement strategies at the TrackInsight European Summit in Paris on Nov 7
16-10-2018

Lionel Martellini speaking on the application of goal-based investing to retirement...

Lionel Martellini, Professor of Finance, EDHEC Business School and Director, EDHEC-Risk Institute, will be speaking on the application of goal-based investing to retirement strategies at the TrackInsight European Summit in Paris on 7 November, 2018. The TrackInsight European Summit is an independent, private event organised by FinTech TrackInsight to foster dialogue with clients, partners &...
Laurent Calvet discussed household finance at the 1st European Midwest Micro/Macro Conference (EM³C), on 5 October, 2018 in Bonn
08-10-2018

Laurent Calvet discussed household...

Laurent Calvet, Professor of Finance, EDHEC Business School and Member, EDHEC-Risk Institute, presented his latest research “From Saving Comes Having? Disentangling the Impact of Saving on Wealth...
EDHEC-Risk and Swiss Life AM France set up a research chair to analyse the role of real estate in investment solutions
01-10-2018

EDHEC-Risk and Swiss Life AM France set...

Swiss Life Asset Managers France and EDHEC-Risk Institute have announced the creation of a three-year research chair at EDHEC-Risk Institute entitled “Real Estate in Modern Investment Solutions.”...

Events

12 Nov

Yale SOM – EDHEC-Risk Harvesting Risk Premia in Equity and Bond Market...

Yale Campus New Haven

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30 Jan

Yale SOM – EDHEC-Risk Harvesting Risk Premia in Alternative Asset Clas...

Yale Campus New Haven

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19 Mar

Advances in Asset Allocation Seminar - Blended Learning Programme

EDHEC Campus London

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Papers published
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Participants trained
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