We typically encourage clients to consider the full opportunity set of investments, including alternative asset classes. Rocaton offers broad market coverage of alternative asset classes, including hedge funds, private equity, real assets and real estate, as well as a range of investment strategies that do not fit neatly into these categories. Depending on client-specific situations, we consider allocations to both direct and fund-of–funds investment strategies.
The exact manner and extent that alternative asset classes are utilized is a function of numerous client-specific factors, including liquidity needs, specific investment objectives, governance structure and risk tolerance. We work closely with clients to establish objectives, provide education, structure portfolios, integrate alternatives into traditional portfolios, identify and analyze risk, select managers and monitor programs and managers.
Our asset allocation process is fully customized, and our centralized asset allocation research team is led by a founding partner of the firm. We typically begin with an in-depth review of the client’s objectives, risk tolerance, internal management resources, governance structure and other relevant considerations.
We then work with the client to:
- Define overall portfolio objectives and the universe of appropriate asset classes
- Develop risk, return, and correlation analyses
- Project plan liabilities, considering client-specific preferences and constraints
- Formulate robust, intuitive allocations that forecast the potential impact of various market environments
We tailor our analysis, inputs and recommendations to each client’s unique situation, emphasizing diversified portfolios that incorporate a wide range of asset classes and investment strategies.
More than half of Rocaton’s clients utilize our defined contribution consulting services. Our comprehensive suite of defined contribution investment consulting services includes:
- Investment structure design
- Evaluation and recommendation of investment managers and funds
- Analysis of investment fees and expenses
- Assistance with the development of an Investment Policy Statement
- Quarterly performance reporting
- Ongoing investment program and manager/fund monitoring
- Research on emerging trends impacting defined contribution plans
- Input on investment-related participant communications
- Ongoing dialogue with our consulting and research professionals
Rocaton began offering discretionary investment consulting services in 2012 as a natural extension of our traditional consulting expertise. Our discretionary service offering leverages Rocaton’s well-defined investment philosophy, manager research process, and experienced professionals to manage all or part of a client’s investment portfolio.
Under our open architecture model, senior professionals construct a portfolio that is customized to reflect each client’s unique needs and objectives. Our discretionary relationships include corporate defined benefit plans, defined contribution plans, endowments and foundations and a high net worth individual.
Depending on the specific engagement, our services may include:
- Asset allocation and portfolio construction
- Assisting plan sponsors with selecting investment options for defined contribution plans
- Investment manager selection and implementation
- Rebalancing and cash flow planning
- Portfolio monitoring and reporting
Rocaton’s RSG (Rocaton Solutions Group) Investment Committee is comprised of five experienced founding Partners who oversee all discretionary investment activities. Our dedicated RSG Operational team is responsible for the implementation and execution of all discretionary decisions and ensuring adherence to stated policies. A senior client advocacy team manages each relationship on an ongoing basis to help ensure that evolving client needs and objectives are the primary focus. In all cases, we work with our discretionary clients to create a unique outsourced solution in the most efficient, cost-effective manner possible.
Rocaton has partnered with financial intermediaries since the firm’s inception in 2002. We have extensive experience developing model asset allocation portfolios and constructing investment programs, as well as recommending mutual funds, separate accounts managers and sub-advisors for distribution to the retail, high net worth, and institutional channels.
The services we provide to our financial intermediary clients typically include:
- Manager search and recommendations
- Research reports on current managers
- Analysis of multi-manager portfolio construction
- Quarterly performance reporting and analysis
- Ongoing discussions regarding industry trends and potential new product ideas
- Ongoing dialogue regarding personnel and organizational changes with investment managers engaged by the financial intermediary
Rocaton’s dedicated manager research team typically conducts approximately 1,700 manager meetings annually across both traditional and alternative asset classes.
Our senior research professionals’ extensive experience and industry contacts are key drivers for investment manager sourcing and ideas and focusing on areas of opportunity.
Our manager research process for initial strategy assessments typically follows a five-step process:
- Investment Manager Sourcing
- Initial Evaluation
- Quantitative Analysis
- On-Site Due Diligence
- Research Review Committee – Strategy Rating
The Research Review Committee (comprised of all the senior research professionals) is charged with the final approval of any rating proposed by a member of the research group to capture Rocaton’s best thinking.
Strategy Ratings – Defined
A – Strategies deemed “best in class” that exhibit positive attributes across a broad range of evaluation criteria.
B – Strategies viewed favorably based on the presence of multiple positive characteristics, but which are not deemed “best in class.”
C – Strategies viewed negatively due to the presence of negative attributes and/or absence of key success factors.
D – Strategies that raise significant concerns based on the presence of severe issues or which exhibit negative attributes across a broad range of evaluation criteria.
Ongoing manager monitoring is a significant part of our dedicated manager research team’s responsibilities as one of our goals is to make sure that our clients continue to be invested in the best possible managers to meet their investment goals.
Rocaton has developed a proprietary, web-based research platform to capture, organize and warehouse all information related to Rocaton’s research and evaluation of investment managers.
All of our deliverables, including quarterly performance reports, can be completely customized. We partner with our clients to create reports, deliver information and make specific recommendations in a manner that is most useful given their unique needs.
Many of our client reports include an executive summary or “Dashboard” report that incorporates relative returns versus objectives over different time periods, as well as comparisons to peers. This is a useful tool to prioritize the client due diligence process and identify inconsistencies in performance expectations.
Rocaton carefully examines sources of over and underperformance using proprietary and third party analytics. We often work with clients to develop a “risk budget” that defines their investment program’s tolerance for risk on a total portfolio basis. The risk budget allocates expected risk across asset classes and managers to seek maximum expected return for risk taken.
Examples of risks that we may consider in this process are: Inflation Risk, Interest Rate Risk, Credit Spread Risk, Equity Market Risk, Commodity Risk, Illiquidity Risk and Currency Risk