Optimum SAA

Investment professionals need to develop robust strategic asset allocations (SAA) to meet their specific needs and to optimize investment returns and manager risks.

Optimum SAA has been developed specifically for insurers and wealth management companies to explore the portfolio space and develop the most suitable SAA. It uses superior modeling and stable optimization techniques to help you better understand your current asset allocation position and to determine the optimized asset allocation within constraints you set.

How can Optimum SAA benefit your business?

The issue
The quality of the forecast outputs will only be as good as the inputs. Poor calibrations could overweight or underweight certain asset classes, producing inconsistent asset allocations that can lead to unrewarded risks in the portfolio e.g. concentration risk.

How you benefit
Drawing on over 30 years of assumptions committee experience and our robust processes for producing asset return assumptions, Optimum SAA provides trusted calibrations for a broad range of asset classes, with flexibility to reflect specific investment views that you hold.

The issue
A traditional, deterministic, linear return analysis resulting in a single required return number is not representative of the volatile returns of markets and provides no insight into risk.

How you benefit
Optimum SAA produces a full results distribution for each allocation, including susceptibility to tail events. This allows you to optimize portfolios by defining risk and return stochastic metrics (e.g. Median Return and Value at Risk (VaR)). In addition, it has the ability to model essential wealth management measures including decumulation portfolios and their sustainability.

The issue
There are many different methodologies to optimize investment portfolios – and not all are as good as each other. Mean variance optimization, for example, can often lead to more unstable optimization results and can have a high level of sensitivity to initial assumptions.

How you benefit
Optimum SAA uses cloud optimization (one of the most sophisticated methods) to generate a cloud of portfolios, which reduces the risk of unstable optimization results. This technique provides the ability to explore a large variety of portfolio options that could be implemented more quickly and increase competitiveness.

The issue
Most tools on the market are generic investment tools that do not factor in the very specific issues that insurers and wealth managers need to bear in mind when creating optimized portfolios. For example, factoring in the impacts on their portfolio of Solvency II Standard Formula SCR and liquidity metrics.

How you benefit
Optimum SAA has been developed with the specific needs of insurers and wealth managers in mind, and comes with a full range of insurer Key Performance Indicators (KPIs) built in. KPIs are the critical indicators of progress towards an intended target and create an analytical basis for decision making that helps focus attention on what matters most. In addition, Optimum SAA has the ability to model essential wealth management measures related to decumulation and sustainability and can also report on Solvency II Standard Formula SCR and liquidity metrics.

The issue
Many technology tools require a substantial investment in time and resources to train staff to become competent users. And the output is often complex data tables requiring interpretation and explanation.

How you benefit
Optimum SAA’s intuitive client interface means you can do complex tasks more easily: you don’t need to be a programming expert to use it or deal with any complex and inflexible IT systems, which will save you a lot of time. In addition, the outputs are easy to understand, visually appealing, and metrics and reporting are tailored to your specific needs. There is also extensive reporting for both single and multiple portfolio analyses.

For further information on how Optimum SAA can help you, including requesting a demo, please contact us at software.enquiries@willistowerswatson.com.