Chapter 5: Portfolio Management for Institutional Investors

In this section

• Common Characteristics of Institutional Investors
  Explore how pension funds, insurers, banks, endowments, and sovereign wealth funds share decisive traits in investing over long horizons, managing fiduciary responsibilities, and adhering to robust governance structures.
• Investment Policy for Institutional Investors
  Exploring how Investment Policy Statements guide institutional investors in setting objectives, constraints, and strategic asset allocations.
• Stakeholders, Liabilities, Time Horizons, and Liquidity Needs
  Discover how unique stakeholder expectations, liability profiles, investment horizons, and liquidity demands shape institutional portfolio strategies and risk management.
• Legal, Regulatory, and Tax Constraints Across Institution Types
  Learn how various laws, regulations, and tax rules shape institutional investment strategies—from pensions and banks to insurers, foundations, and endowments—and explore real-world examples with best practices and pitfalls.
• Risk Considerations for Defined Benefit Pension Plans
  Explore the key risk factors associated with Defined Benefit Pension Plans, including sponsor health, funding status, workforce demographics, longevity concerns, inflation exposure, and liability-driven investing strategies.
• Evaluating Institutional Investment Policy Statements
  Learn how to evaluate the Investment Policy Statement for an institutional investor, ensuring mission alignment, performance benchmarks, effective constraints, and robust oversight mechanisms.
• Evaluating Portfolios of DB Plans, SWFs, Endowments, Foundations
  Explore strategies to assess and manage portfolios for Defined Benefit plans, Sovereign Wealth Funds, Endowments, and Foundations, including asset–liability matching, performance metrics, and governance best practices.
• Balance Sheet Management for Banks and Insurers
  Explore how banks and insurers manage capital, liquidity, and interest rate risk on their balance sheets, covering regulatory frameworks, risk management tools, and practical strategies.
• Pension Risk Transfer Strategies
  Explore buy-out, buy-in, longevity swaps, and other pension de-risking solutions that help sponsors stabilize or remove pension liabilities from their balance sheets. This article breaks down key strategies, their pros and cons, and real-world considerations, offering practical guidance for institutional investors.
• Integration of ESG Factors in Institutional Portfolios
  Explore how institutional investors integrate Environmental, Social, and Governance (ESG) considerations into portfolio strategies, including screening approaches, factor models, and active ownership.