Asset Owner Strategy Guide: How to Craft an Investment Strategy

Crafting an investment strategy is the first step within an asset owner’s overall investment process. Asset owners should craft a clear and explicit investment strategy that comprehensively considers: all long-term trends affecting their portfolios, how the fund fulfils the asset owner’s duciary duty and how it can operate as efficiently as possible for beneficiaries and other stakeholders.

The strategy process starts broadly, with a wide survey of the external and internal context in which it will be developed (Step 1). This is used to de ne the organisation’s vision for the future and its mission (Step 2), followed by a more specific set of investment principles (Step 3). The process then narrows in on selecting executable strategies and strategically allocating capital (Step 4). Once completed, the investment strategy will be translated into initiatives for implementation.

A methodical approach is crucial. Common pitfalls include: skipping steps, lack of consensus/board-alignment, lack of detail/ exibility or creating a strategy without sufficient consideration of how it will be implemented.

To be effectively embedded in the organisation, any responsible investment considerations must be part of the core investment strategy process.