Our ‘best ideas’ portfolio: The Towers Watson Partners Fund

Our unconstrained approach means we're able to exploit ideas right across the investment spectrum, which includes equities, credit, hedge funds, as well as a key focus on private markets. Importantly, these ideas are implemented via external specialist investment managers in recognition that specialist strategies require specialist skills. We target an equity-like return of 5% above inflation over the long term, but with much lower risk than equities.

Genuine portfolio diversification is central to the Partners Fund and is the all important first line of defense when it comes to managing risk. And risk, of course, comes in all sorts of shapes and sizes, but managing it well across all its different guises, from traditional investment risks to sustainability-related risks, is crucial to long term success. Downside risk gets a particular mention, as preserving capital in times of stress will always be fundamental. After all, it requires a return of just over 10% to recover from a 10% fall, but a return of 100% to recover from a 50% fall.

We ensure we build a resilient portfolio by sizing ideas appropriately so that no single idea dominates outcomes. And to generate the stable long term returns we're looking for, we work closely with our well-resourced and highly experienced research team, which consists of more than 85 skilled professionals around the world to identify highly attractive ideas from right across the investment universe.

Firstly, economies of scale. In our industry, it will always be cheaper to manage more and not less. We use the WTW's broader scale and influence to negotiate fees with our external managers to generate significant fee savings for our investors.

Secondly, a broad opportunity set. The Partners Fund benefits from an unconstrained approach. As I mentioned, we can and we do invest right across the investment spectrum and beyond traditional equities and bonds. We believe that by having more levers to pull, then probably over time, you're going to do a better job than by just having two.

There are periods, and we've experienced one recently, when both equities and bonds go down together. And so having a broader opportunity set can lead to smoother returns. It also means we can access more attractive sources of return. And private markets are a great example of that.

The Partners Fund offers instant access to an attractive, well-diversified, and mature private markets portfolio. These assets have historically provided returns comfortably in excess of equities and we expect them to be a driving force going forwards. We absolutely believe that having them as part of the opportunity set is an advantage.

And finally, skilled risk management, understanding and then managing the risks associated with a multi-asset portfolio that invests right across the investment universe can be complicated. It requires a deep understanding of each and every portfolio holding, including how each holding is likely to perform across a range of scenarios, as well as the tools, experience, and know how to understand portfolio level outcomes. We have a long and proven track record of successfully managing these risks.

I hope you found this short overview useful. For more information, please do get in touch with our team or visit our website. Thank you for your time.