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WEALTH MANAGEMENT | Terry Gangcuangco, Singapore
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EDHEC creates target-date funds research chair

In partnership with UFG, the EDHEC Risk and Asset Management Research Centre has launched the creation of the "Dynamic Allocation Models and New Forms of Target-Date Funds for Private and Institutional Clients" research chair.

Headed by scientific director Lionel Martellini, researchers at the EDHEC Risk and Asset Management Research Centre will examine the limitations of target-date funds of gradually more conservative profiles and the advantages of an asset-liability management approach sensitive to the period and to the economic cycle for target-date funds, particularly for pensions. The results of the analysis will be presented at EDHEC Institutional Days in Paris on 26 and 27 May 2009.

Noël Amenc, director of the EDHEC Risk and Asset Management Research Centre, said, "An investment solution tailored to each client, for institutional asset management as much as for private wealth management, involves asset-liability management. The optimal form of asset-liability management relies on dynamic allocation, as conventional static allocation is sub-optimal (unless you assume that the average returns and the volatility of assets are constant, which is a fairly unrealistic assumption). So it is only logical for the allocation to change when the world changes, and the investor should not be short-sighted; instead, he should be open to future changes in the allocation decisions he makes. The purpose of the UFG chair is to find a practical use for this model."

Xavier Lépine, chairman of the board of UFG, said, "UFG was one of the first companies to provide active backing for the EDHEC Risk and Asset Management Research Centre. We are delighted with this new long-term commitment: the research chair on dynamic allocation models and new forms of target-date funds. It is a natural part of UFG’s development strategy and above all of its determination to 'restore meaning to finance.' Today, the investment solutions offered investors do not seem optimal to us either in the choice of building blocks for the allocation or in the weights assigned asset classes."

A joint UFG/EDHEC steering committee will oversee the "Dynamic Allocation Models and New Forms of Target-Date Funds for Private and Institutional Clients" research chair.

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