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
December 2019 Returns (%)
Zone, Retirement year
Not adjusted
Cost-of-Living-adjusted
US, 2023
1.76
1.71
US, 2028
1.83
1.75
US, 2033
1.52
1.39
US, 2038
0.76
0.57
INVESTMENT MANAGEMENT WITH PYTHON AND MACHINE LEARNING
Newsletter EDHEC Risk
EDHEC Research Insight Supplement
Factor Investing in Liability Driven and Goal-Based 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

BERND SCHERER: BEST SYSTEMATIC INVESTING RESEARCH PAPER OF THE YEAR
25-03-2020

BERND SCHERER: BEST SYSTEMATIC INVESTING RESEARCH PAPER OF THE YEAR

Bernd Scherer, Research Associate at EDHEC-Risk, Winner of the 2020 Best Systematic Investing Research Paper of The Year A Journal of Portfolio Management article entitled, "Value by Design?" by Bernd Scherer, Research Associate at EDHEC-Risk Institute, Head of Private Wealth Portfolio Management, Head of Product Development, Bankhaus Lampe KG and Former Professor of Finance, EDHEC...
Impact on society, useful research and new learning models:  EDHEC marks its engagement in favour of future generations
17-03-2020

Impact on society, useful research and...

Underpinned by an ambitious investment plan amounting to some €230 million, the 2020-2025 strategic plan is set to drive an in-depth transformation of EDHEC: through our research, by making EDHEC...
Gianfranco Gianfrate invited to join the jury of the Sustainable and ESG Investment Awards
10-03-2020

Gianfranco Gianfrate invited to join...

We are honoured to announce that Professor Gianfranco Gianfrate, Sustainable Finance Lead Expert at EDHEC-Risk Institute has been invited to become a jury member of the Sustainable and ESG...

Events

26 May

Beyond Beta Europe

L’Espace Saint Martin, Paris

Register

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
2 500
Participants trained
100 000
Newsletter readers