David
Today we're talking about the Alpha Meeting. This is a step that occurs during the third stage of our investment process. But to give you some context, let me tell you what comes before that. First, we evaluate the macro environment. What does that entail?
Well, we look at two things. We utilize the expertise of our Policy and Politics Team. In addition to that, we measure risk aversion through our MRI. Secondly, we actually identify opportunities in the marketplace. What does that mean? We evaluate alphas coming out of our equity models and in our fixed income models. And then the third stage, we get to the alpha model. So I want to remind you: also at this stage of the game, our investment professionals have lots of information to evaluate.
They have amassed a lot of information with respect to their discretionary views and have done third-party research. In addition to that, they have alpha or alpha information that is coming from our models, from our fixed income model, our equity model, they have inputs from our MRI. And then lastly, they have information coming from Policy and Politics.
Rob, since I have you here, what really happens during the Alpha Meeting?
Rob
Well, as you mentioned, David, there are several steps in our process that we go through at the beginning of each month to identify opportunities to add value through active asset allocation, leveraging the quantitative and discretionary tools at our disposal.
Now we take a nuanced approach in tactical asset allocation in that obviously we're pulling the levers of asset allocation, but we want to segment broad market comparisons — so think equities versus bonds, cash, commodities — from the intra asset class. So within equities, think sector and region and with fixed income, think rates and credit. So those broad market comparisons we refer to as directional opportunities and the intra asset class we refer to as relative value.
Now, the last step in our process culminates in the Alpha Meeting. This is where we bring the seven trade team leaders together in a meeting facilitated by our CIO Dan Farley, with the idea of synthesizing the final set of trades that we think ultimately will improve the positioning of the portfolio and ultimately drive performance for our clients.
David, as a participant in this and these meetings, and what are some of the key takeaways and observations that you've noted?
David
Rob, I'm glad you asked. There's a couple of things that actually I think about. First is just the amount of data and information that is presented during those meetings. The second thing I think about is the robust and lively discussions that occur during those meetings — so leave your egos at the door. And then lastly, despite the fact that we're having lots of great debate and discussion, there's still a highly organized way of coming to your decisions. So the framework is highly organized and efficient, and I think that is just a very positive thing to have for any process.
So for those of you who are interested in our Alpha process or products, please visit our website.
