The investment world can be heavy on technical terms and jargon; we’ve created this glossary to make our research and thinking more accessible to everyone.
If you have any specific questions, then please do get into contact.
A-E
- Balance sheet management – A holistic view of the fund’s assets and liabilities, managing them together to optimise overall performance.
- Capital allocation – The process of distributing financial resources across different investment opportunities.
- Data culture – The organisational mindset and practices that ensure trustworthy, well-governed, and accessible data as a foundation for decision-making.
- Delegated TPA – An approach where parts of the portfolio management are outsourced or delegated, while retaining total-fund oversight.
- Dynamic allocation – Adjusting capital allocation in response to market conditions and strategic priorities, as opposed to static benchmarks.
- ESG – Environmental, Social, and Governance — a set of non-financial factors considered in investment decisions.
F-L
- Governance model – The structure and processes through which investment decisions, risk management, and accountability are executed.
- Institutional investors – Large organisations like pension funds, sovereign wealth funds, and endowments that invest large sums of money.
- Joined-up TPA – A more integrated approach where managers, governance, and risk functions collaborate to meet whole-of-fund objectives.
M-R
- Mindset TPA – The initial stage of TPA adoption where teams begin to think in total-portfolio terms, even if formal structures remain unchanged.
- One-fund TPA – The most advanced TPA model where capital allocation, governance, risk, and sustainability are fully unified at the total portfolio level.
- Organisational Alpha – A concept that attributes superior investment performance to governance, culture, leadership, and organisational design, rather than just market factors.
- Overlay / Completion portfolio – Tools used in Top-down TPA to adjust and enhance the overall portfolio without changing underlying mandates.
- Peer study – A comparative study assessing how funds rate themselves on TPA adoption, used to benchmark progress across the industry.
- Reference portfolio – A term generally determined as the hypothetical simple, low-cost liquid, (index) diversified (lean manufacturing) portfolio that is made up of listed equities and cash or bonds (credit), and often includes a duration and inflation element in the case of a pension fund. This acts as a critical guide to a fund’s longer term risk profile, derived from the framework of return objective, risk tolerance, and target portfolio; it also acts a return comparator and in some cases a benchmark. e.g. CalPERS uses a 70/30 reference portfolio (70% public equities, 30% cash) as a benchmark for active management decisions.
- Risk 2.0 – An evolved approach to risk management under TPA, focusing on dynamic, forward-looking, and sustainability-integrated risk perspectives.
S-Z
- Siloed benchmarks – Traditional performance targets that are set at the individual asset class level, limiting cross-portfolio optimisation.
- Strategic Asset Allocation (SAA)— A traditional investment model that allocates capital based on pre-set asset class benchmarks.
- System thinking – A holistic approach that delves into the interconnections and interactions within systems to uncover the root causes of issues and devise more effective solutions
- Three-body problem – In physics, this refers to the problem of determining the motion of three celestial bodies under gravity. Thinking Ahead uses this concept metaphorically to describe the challenge of balancing reference, strategic, and total portfolios in investment.
- Top-down TPA – A stage where dynamic allocation across asset classes is conducted at a high level (e.g., by the CIO), within existing mandates.
- Total-fund thinking – A mindset that prioritises fund-wide outcomes over siloed performance metrics of individual asset classes.
- Total Portfolio Approach (TPA)— An investment model focusing on holistic, fund-wide capital allocation beyond traditional asset-class siloes.
- Total Portfolio Approach (TPA) spectrum – A conceptual continuum illustrating different levels of TPA adoption, from basic mindset shifts to fully integrated models.
- Whole-of-fund objectives – Investment goals and outcomes that apply to the portfolio as a unified whole rather than segmented parts.
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