Monitoring the effectiveness of asset allocation decisions

Document description

In this paper we describe the main approaches to asset allocation decisions in the life and pension industries, discuss the issues regarding measuring the effectiveness of asset allocation advice, and suggest possible ways in which the effectiveness of asset allocation can be monitored. Although we briefly consider the applications of finance theory to asset allocation, we specifically focus on current practice (a fund-centric viewpoint). We do not take a stance on whether or not the current fund-centric viewpoint is best practice, but rather outline how advice within that context might be improved.