Portfolio construction

Investment committee overview

November 10, 2023 - 3 min read

The Natixis Investment Managers Solutions Investment Committee was established in 2015 to provide asset allocation guidance for our portfolio consultation clients. The Committee also develops capital market views and allocation recommendations for the firm's tactical model portfolios, and uses its assumptions to manage the proprietary Clarity Partners Global Moderate Portfolio.

The 10 members of the Investment Committee average 15 years of investment industry experience. They have wide-ranging expertise in multi-asset allocation and hold a variety of financial credentials including CFA^®, CAIA, CIPM and FRM^®. Many are consultants and analysts whose opinions may reflect insights gained from their interactions with financial advisors. Others bring experience with institutional and high net worth clients as well as investment strategy research and portfolio management.

Investment Committee members hold credentials including CFA^®, CAIA, CIPM and FRM^®.

The Committee's diversity of backgrounds assures lively and well-informed discussions related to the economic, market, and corporate environment. Members review data from multiple angles, gleaning various insights and challenging consensus views. Equity and Fixed Income subcommittees meet weekly, evaluating macro, fundamental, and valuation data to establish their recommended allocations. The full Committee meets weekly and votes monthly, with the highest conviction views submitted to the model portfolio management teams.

Active allocation recommendations

The Investment Committee's objective is to produce stronger risk-adjusted returns than the average professionally managed moderate risk profile portfolio over both strategic and tactical time horizons. Strategic assumptions cover a 12–18 month horizon and form the foundation of our hybrid model portfolio series. Shorter-term tactical recommendations use a three- to six-month outlook reflected in the portfolios' tactical tilts.

Themes and examples: tactical tilt

In model portfolios with a tactical tilt component, Investment Committee views are generally implemented using ETFs. This example from December 2022 focuses on actions taken as inflation moderated and equities formed a bottom.

Macro backdrop

An inflation surge in 2022 prompted aggressive US Federal Reserve interest rate hikes.
As the Federal Reserve hiked, interest rates exploded higher across the curve and equities sold off.
After a series of large interest rate hikes, inflation peaked and equities formed a bottom in late 2022.

Investment implications

Cyclical areas of the market tied to economic growth and interest rates sold off aggressively in 2022.
These beaten down areas of the market could provide strong upside as inflation and interest rate headwinds ebbed.
Consumer demand remained strong, providing support for cyclical equities and pushing recession forecasts further out.

Risks to this view

Inflation picks up again and the Federal Reserve is forced to resume hiking rates aggressively.
Economic growth begins to slow considerably and recession fears increase.

Action

To take advantage of this asymmetric risk/reward opportunity, position the portfolio toward higher beta, cyclical sectors.

Outcome

As subsequent inflation releases undershot estimates, interest rate volatility declined and the equity rally kicked into gear.
Beaten down cyclical sectors rallied strongly as tail risks of sticky inflation and low growth subsided.

In the context of portfolio construction, the Investment Committee's tactical asset class views complement the suite of Natixis active Managers. The portfolio management team prefers high conviction active managers with strong fundamental investment processes. Tactical portfolio views are expressed through the use of ETFs, while strategic views are expressed through active managers. This combination gives Natixis model portfolios the opportunity to outperform over both short and long time horizons through tactical positioning and fundamental security selection.

Natixis Model Portfolio Program

The Natixis Investment Managers Solutions team has nearly two decades of success creating and managing multi-asset model portfolios, providing institutional-quality investments for retail clients. Explore the breadth of our model offering on the Natixis Model Portfolio Program page.

This information is provided for informational purposes only and should not be construed as investment advice.

CFA^® and Chartered Financial Analyst^® are registered trademarks owned by the CFA Institute.

All investing involves risk, including the risk of loss. Investment risk exists with equity, fixed income and alternative investments. There is no assurance that any investment will meet its performance objectives or that losses will be avoided.

Indexes are not investments, do not incur fees and expenses and are not professionally managed. It is not possible to invest directly in an index.

Unlike passive investments, there are no indexes that an active investment attempts to track or replicate. Thus, the ability of an active investment to achieve its objectives will depend on the effectiveness of the investment manager.

Asset allocation models are intended for informational purposes only and should not be construed as a recommendation or investment advice, as the allocations provided do not take into account the investment objectives, risk tolerance, restrictions, liquidity needs or other characteristics of any one particular investor.

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