Asset Allocation

Multifaceted, Customized, Risk-controlled

Asset Allocation

Asset allocation is integral to the success of any investment strategy. It will likely be among the most important investment decisions you make.

To this end, NEPC employs a rigorous and disciplined process to determine the optimal mix of assets to meet your individual goals, risk tolerance and time horizon. We use various proprietary tools, models and research to construct investment portfolios that combine long-term strategic initiatives with shorter-term tactical allocations.

Capital Market Assumptions

At the heart of our asset allocation process are our capital market assumptions, which serve as the building blocks of a balanced and diversified portfolio. These assumptions include forecasts for risk and return projected over an investment horizon of 30 years and a shorter-term forecast of five-to-seven years to cover the next investment cycle.

2019 Asset Class Assumptions

Key Market Themes

In addition, we also incorporate into the asset allocation process our key market themes that we believe will influence long-term investments. Drawn from compelling secular and cyclical trends, and updated annually, these are our current themes:

  1. Late cycle dynamics
  2. Tightening global liquidity
  3. China transitions
  4. Globalization backlash

To hear more of our views on global markets, please read our annual asset allocation letter, quarterly market commentary, and look up our insights for NEPC’s global, macroeconomic and market research.

Strategic Asset Allocation  

We believe in using a mosaic of approaches to arrive at appropriate strategic allocations since no single asset allocation model has all the answers. These multiple perspectives also minimize exposure to the shortcomings of any single method. Below is a sample of some of the asset allocation techniques we use to help build a balanced and diversified investment plan tailored to meet your objectives. Our priority is to add value and preserve capital.

  • Mean-variance optimization
  • Risk budgeting
  • Scenario analysis
  • Liquidity analysis
  • Factor analysis
  • Active risk budgeting
  • Stochastic modeling

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Private Wealth: Asset Allocation