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By Mathilde Sauvé, Head of Institutional Solutions at AXA IM
Traditionally, insurers constructed investment portfolios using a core and satellite approach. Within this structure, the core component was designed to match a set of liability risks and thus consisted of high quality liquid bonds. The satellite component supplemented the core with a periphery of diversifying assets (riskier credit such as Emerging Debt or High Yield and non-liquid strategies such as Infrastructure, Real Estate Debt, and so on). Although the two components worked in tandem, each was built separately and subject to relatively fixed allocations.
A number of studies have shown that flexible asset allocation itself is a valuable source of additional return. Pension fund and...
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