Choosing a GTAA Manager

There exist approximately 25 investment firms globally that credibly offer TAA/GTAA services. Some of these have not committed the resources to offer a truly global product and therefore offer only domestic TAA, and some firms have not developed a global derivatives trading capability. However, about 10 major global players exist in the modern GTAA industry, with more than 80 percent of market share concentrated in the top four players.26

We believe a strong GTAA manager possesses the following key traits:

■ A sound investment philosophy based on strong theoretical and proven empirical evidence.

■ A quantitative approach that can be intuitively explained.

■ A program that offers diversification in active risk across strategies, across investment themes, and across securities held in the portfolio.

■ An appropriate risk budget that does not rely too heavily on market timing.

■ An independent risk management group ensuring that investment philosophy and client guidelines are followed.

■ A strong commitment to continued research as models and markets evolve.

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