GLOBAL EVENTS, TRENDS
& IMPACTS FROM A
MACRO-LEVEL VIEW
EVESTMENT
INSTITUTIONAL
INVESTMENT
INTELLIGENCE
2016
SPEAKERS:
Tate Haymond
Charles Ashwanden
Peter Laurelli
Samuel Lanasa
GLOBAL EMERGING
MARKET EQUITY
CURRENCY
TRENDS
THE SHIFT FROM
DIVERSIFIED
ASSET CLASS
HOST
GLOBAL EMERGING
MARKET EQUITY
Asset Flow and Activity Analysis (07/2015 – 06/2016)
GLOBAL EMERGING MARKETS EQUITY – TOTAL AUM ($M)
1,400,000
1,200,000
1,000,000
800,000
600,000
400,000
200,000
0
GLOBAL EMERGING MARKET EQUITY - ACTIVE VS. PASSIVE NET FLOW ($M)
10,000
5,000
0
Q3 2015
Q4 2015
Q1 2016
-5,000
-10,000
-15,000
-20,000
Flows into Active
Flows into Passive
Q2 2016
GEM ACTIVE EQUITY AUM GROWTH BY
DISTRIBUTION CHANNEL (07/15 - 06/16)
SEGREGATED
ACCOUNTS
INSTITUTIONAL
-10.8%
-10.9%
FUNDS
RETAIL
FUNDS
MSCI EM
EQUITY 1 YR
RETURN
-11.7%
-17.3%
Global Emerging Market Active Equity – 1 Year Net Asset Outflow Analysis by 3yr performance
quartile ranking (07/15 - 06/16)
TOP QUARTILE
$-14,684.4
2ND QUARTILE
3RD QUARTILE
BOTTOM QUARTILE
-17,187.58
$-18,293.6
$-26,129.2
Global Emerging Market Active Equity – 1 Year Net Asset Inflow Analysis by
3yr performance quartile ranking
$19,018.3
$10,757.4
$5,817.1
2,338.91
TOP QUARTILE
2ND QUARTILE
3RD QUARTILE
* Quartiles are based on 3 year performance as of end of Q2 2016 relative to the eVestment Emerging Markets Equity Peer Group
BOTTOM QUARTILE
GEM Active Equity – 1 year Net Flows by quartile: Fees
TOP QUARTILE (HIGHEST FEE)
2ND QUARTILE
3RD QUARTILE
BOTTOM QUARTILE
$-13,470.8
$-2,274.6
$-2,670.4
$-465.6
GEM Active Equity – 1 year Net Flows by quartile: Portfolio Concentration
TOP QUARTILE (MOST
CONCENTRATED)
2ND QUARTILE
3RD QUARTILE
BOTTOM QUARTILE
$-5,046.6
$-2,561.9
$-6,651.3
$-12,954.1
GEM Active Equity – 1 year Net Flows by quartile: Tracking Error (3yr)
TOP QUARTILE (HIGHEST TE)
2ND QUARTILE
3RD QUARTILE
BOTTOM QUARTILE
$-2,417.7
$-5,130.1
$-8,202.1
$-13,357.4
GEM Active Equity – 1 year Net Flows by quartile: Standard Deviation (3yr)
TOP QUARTILE (HIGHEST SD)
2ND QUARTILE
3RD QUARTILE
BOTTOM QUARTILE
$-1,573.8
$-5,241.0
$-5,648.4
$-6,644.2
GEM ACTIVE EQUITY – 1 YEAR NET FLOWS BY QUARTILE: ACTIVE SHARE
TOP QUARTILE (HIGHEST
ACTIVE SHARE)
$525.1
2ND QUARTILE
3RD QUARTILE
BOTTOM QUARTILE
$-2,155.9
$-10,890.1
$-17,382.3
GEM Active Equity – 1 year Net Flows by quartile: Dividend Yield (1yr)
TOP QUARTILE (HIGHEST DY)
2ND QUARTILE
3RD QUARTILE
BOTTOM QUARTILE
$-1,702.2
$-7,319.5
$-10,703.5
$-8,472.0
GEM Equity - 1 year Net Flow by quartile:
Portfolio Allocation to China
TOP QUARTILE
(HIGEST
ALLOCATION)
2ND QUARTILE
$-2,009.8
$-5,614.2
3RD QUARTILE
BOTTOM QUARTILE
GEM Equity - 1 year Net Flow by quartile:
Portfolio Allocation to Eastern Europe
TOP QUARTILE
(HIGEST
ALLOCATION)
2ND QUARTILE
$-3,291.5
3RD QUARTILE
BOTTOM QUARTILE
$-1,668.3
$-4,783.7
$-8,361.5
$-24,026.7
GEM Equity - 1 year Net Flow by quartile:
Portfolio Allocation to Far East ex-China
$-20,079.5
$816.0
TOP QUARTILE
(HIGHEST
ALLOCATION)
2ND QUARTILE
3RD QUARTILE
BOTTOM QUARTILE
$-7,806.0
GEM Equity - 1 year Net Flow by quartile:
Portfolio Allocation to Latin America
$-11,878.3
$1,691.1
$-16,014.4
GEM Equity - 1 yr Net Flow by quartile: Portfolio
Allocation to Africa/ME
TOP QUARTILE
(HIGHEST
ALLOCATION)
$-3,538.2
2ND QUARTILE
$-6,409.8
3RD QUARTILE
TOP QUARTILE
(HIGEST
ALLOCATION)
$-11,422.4
BOTTOM QUARTILE
$-5,146.7
$-19,788.0
2ND QUARTILE
$-25,861.8
3RD QUARTILE
$264.7
BOTTOM QUARTILE
CONCLUSIONS
Metric
Fees
Quartile Range
associated with the
smallest 1 year net flow
Quartile Range
associated with the
largest 1 year net
flow
35 - 78bps
100 - 150bps
.907 - 1
.737 - .817
3.53 - 4.88
4.88 - 6.37
15 - 58
94 - 180
2.13% - 2.60%
3.11% - 3.86%
Africa/ME Allocation
11% - 17.6%
0% - 6.7%
China Allocation
19.5% - 24%
0% - 12.4%
48.1% - 60.1%
43.3% - 48.1%
Eastern Europe Allocation
2.7% - 5.2%
7% - 12.6%
Latin America Allocation
0% - 10.9%
16.8% - 25.8%
Active Share
3-year Tracking Error (MSCI EM)
Number of Holdings
Dividend Yield
Far East ex China Allocation
Global Active EM Equity – Flow Trends
EM Equity Net Flows - Last 3 years
EM Equity Net Flows- Last 6 months
+$685m
-$1,141m
+$14,122m
-$3,356m
EUROPE EX-UK: PRE BREXIT VS. POST BREXIT INSTITUTIONAL SENTIMENT
TOTAL NUMBER OF REVIEWS PER PRODUCT – PRIMARY UNIVERSE
US Corporate Fixed Income
Emerging
MktsMkts
All Cap
Core
Emerging
All Cap
CoreEquity
Equity
155
US High Yield Fixed Income
1 month
Pre Brexit
Global High Yield Fixed Income
Emerging Mkts Fixed Income - Local Currency
Global Large Cap Core Equity
Euro High Yield Fixed Income
Fundamental - Long/Short Equity
Global Small Cap Equity
Global All Cap Core Equity
0
50
100
150
200
250
300
350
TOTAL NUMBER OF REVIEWS PER PRODUCT –PRIMARY UNIVERSE
Mkts
All Cap
Core
Equity
EmergingEmerging
Mkts All
Cap
Core
Equity
320
Global
GlobalREIT
REIT
174
Emerging Mkts Fixed Income - Hard Currency
Emerging Mkts Fixed Income - Blended Currency
1 month
Post Brexit
US REIT
Global All Cap Core Equity
Global Large Cap Core Equity
Emerging Mkts All Cap Value Equity
Emerging Mkts Large Cap Core Equity
US High Yield Fixed Income
0
50
100
150
200
250
300
350
Key Takeaway: Q3 Net EM Active Equity up $6.7BN
Gross Flows – Total AUM
$25K
$20K
$15K
$10K
$5K
$0K
$-5K
$-10K
$-15K
$-20K
$-25K
$-30K
$-35K
Q3-2015
Inflows
Outflows
Net Flows
CURRENCY TRENDS
Influence on Global Allocations
DEPRECIATION
DXY
GBP/USD
EUR/USD
USD/JPY
How do regional asset
owners tend to react
to currency events?
• Quickly reduce risk
• Reposition currency exposure
• Seek alternative, attractive sources of yield
JAPANESE INVESTORS
WHEN YEN
DECLINED
5%
$35,000
-5%
$20,000
-15%
$5,000
-25%
-$10,000
2. Reposition currency
exposure
3. Seek attractive,
alternative source
of yield
-35%
Mar-11
USD/JPY
Feb-12
Jan-13
US Corp Fixed Income
Dec-13
Nov-14
Oct-15
Emerging Markets Fixed Income
-$25,000
Sep-16
Europe Fixed Income
USD millions
1. Quickly reduce risk
EUROPEAN INVESTORS
5%
$55,000
WHEN EURO
DECLINED
0%
$45,000
1. Quickly reduce risk
USD millions
-5%
$35,000
-10%
$25,000
-15%
$15,000
-20%
$5,000
-$5,000
Mar-11
Feb-12
Jan-13
EM Fixed Income
Dec-13
US High Yield
Nov-14
Oct-15
EUR/USD (right)
-25%
Sep-16
IN
E U R O P E AENU IRNOVPEESATNO R
SV E S T O R S
$30,000
$42,000
WHEN EURO
DECLINED
$26,000
USD millions
2. Accelerate allocations
to home currency
markets
$20,000
$10,000
$10,000
$0
-$6,000
-$22,000
-$10,000
Mar-11
Dec-11
Sep-12
Jun-13
Mar-14
Dec-14
Sep-15
EUR/USD
Europe Fixed Income
Euro High Yield (right)
Jun-16
EUROPEAN INVESTORS
105
$2,250
WHEN EURO
DECLINED
$1,750
USD millions
3. Seek alternative,
attractive sources
of yield
100
95
$1,250
90
$750
85
$250
80
-$250
-$750
Mar-11
Feb-12
Global REIT
Jan-13
Dec-13
EUR/USD (scaled, right)
Nov-14
Oct-15
75
Sep-16
Global REIT Views (scaled, right)
UK INVESTORS
$10,000
$10,000
$8,000
WHEN GBP/USD
DECLINED
$6,000
USD millions
1. Quickly reduce risk
-$10,000
-$30,000
$4,000
-$50,000
$2,000
$0
-$70,000
-$2,000
-$90,000
EM Fixed Income
US HY (right)
GBP/USD
GBP/EUR
UK INVESTORS
25%
$25,000
BUT WHEN
GBP/EUR
DECLINED NEXT…
2. Allocate to home
currency/cash
3. Seek alternative
source of yield (not
quite there yet)
$5,000
USD millions
1. Further reduce
external exposure
20%
15%
10%
-$15,000
5%
-$35,000
0%
-$55,000
-5%
Global Fixed Income
UK + US Enhanced Cash
UK Fixed Income
GBP/EUR
NON-US EQUITY – GLOBAL INVESTORS
$50,000
$140,000
PASSIVE.
QUANTITATIVE.
$40,000
$100,000
$30,000
$20,000
$60,000
$10,000
$20,000
USD millions
• U.S., Japan, Canada
to quant after USD
appreciation
USD millions
• International,
not U.S.
$0
-$20,000
-$10,000
Passive - US (left)
Quant - US
Quant Canada
Quant - Japan
Quant - Europe ex-UK
NON-US EQUITY – GLOBAL INVESTORS
$100,000
PASSIVE.
QUANTITATIVE.
USD millions
-$300,000
-$700,000
-$1,100,000
-$1,500,000
Passive - US (left)
Quant - US
Quant - Europe ex-UK
Quant Canada
Quant - Japan
Active - All
Citi Global Investor Sales
November 2016
The Shift from Diversified Asset Class to Factor-Driven Index
Portfolios Reshapes Active Management & Wealth Distribution
Overview of Key Findings from the 2016 Citi Industry Evolution Survey
Citi Business Advisory Services
Sam LaNasa, 212-723-9078 [email protected]
For Institutional Investors Only
5 MAJOR TRENDS DRIVING THE INVESTMENT MANAGEMENT INDUSTRY
Each of these drivers is contributing to a foundational shift in how investors view portfolio
construction. All are helping to promote increased use of passive products.
Low Return
Environment
Reduced Bank
Liquidity
Improved
Portfolio Risk
Analytics
Increased
Demand for
Low Cost
Investment Funds
Benefit of
Holding Indexes
Over Individual
Securities
Better Insight
Into the
Factors that
Make Up Returns
Disruptive
Impact of
Emerging
Technologies
Growth in
Retirees & SelfDirected Investing
Democratization
Of Quantitative
Risk & Portfolio
Construction
Frameworks
Use of
Robo-Advisory to
Support Fiduciary
Role & Avoid
Underperformance
Impact
Confluence of these Factors Moving the Industry to the Tipping Point for Passive Investing
MACRO INVESTING ENVIRONMENT LIMITS RETURNS
1. Low Return Environment
Policy rates plummeted and correlations across and within asset classes increased in the wake
of the GFC making yield scarcer and diversification harder.
Interest Rate Trends in the Period Pre- & Post-GFC
Actions stemming from the Global
Financial Crisis (GFC) either created
or exaggerated the following
challenges to effective portfolio
management:
•
Falling yields compressed the
return environment.
•
Diminished independence
between yields of the same asset
class across countries, and also
between different asset classes in
the same country
•
Increasing correlations that were
already evident pre-GFC
accelerated making it harder to
diversify the portfolio
Correlation Between U.S. Equities & Bonds
Source: Bloomberg, Citi Business Advisory Services
FOCUS ON MANAGEMENT FEES INTENSIFIES
1. Low Return Environment
Fees assume a much higher level of importance when the absolute level of available returns is
low, and investors become much more sensitive to their impact.
•
Irrespective of the prevailing yield environment, when fees are fixed, the amount of portfolio returns
retained by the investor erodes when returns fall.
Effect of Fees On Portfolio Returns Over 30 Years: $100,000 Initial Investment
20%
87,996
80,236
54,548
71,239
60,815
30%
INITIAL
INVESTMENT
63,546
40%
73,970
48,746
34,785
50%
86,038
60%
100,000
18,645
116,140
Percentage of total return
275,886
INITIAL
INVESTMENT
70%
46,788
20%
Capital
156,308
251,058
222,437
Fees
181,136
30%
209,757
40%
189,468
107,854
50%
80%
242,726
60%
151,515
70%
90%
280,679
Percentage of total return
80%
1% Real Growth Rate
100%
324,340
90%
374,532
100%
57,662
5% Real Growth Rate
10%
10%
0%
0%
0.50%
1.00%
1.50%
2.00%
2.50%
3.00%
Fees
3.50%
0.50%
1.00%
1.50%
2.00%
2.50%
3.00%
Fees
Gross Return: $432,194
Fees Paid: $189,468 (44%)
Gross Return: $134,785
Fees Paid: $60,815 (45%)
Net Return: $242,726 (56%)
Net Return: $73,970 (55%)
Source: Bloomberg. Returns based on Citi Broad Investment Grade Index and S&P500
3.50%
Fees
Capital
LIQUIDITY CONCERNS IMPACT TRADING DECISIONS
2. Reduced Bank Liquidity
Post-GFC capital requirements for banks have resulted in much less liquid markets, driving
investors to change how they obtain exposures from individual securities towards index products.
Tradable Securities Held on U.S. Consumer Bank
Balance Sheets (Excluding Loans)
•
Basel III capital requirements
resulted in a significant reduction in
banks’ balance sheets post-GFC
•
Reduced capacity and appetite to
take on and warehouse risk from
the sell-side has made markets
more difficult to trade
•
Survey participants noted that these
challenges are discouraging many
investors from holding individual
securities and instead prompting
them to look at replacing those
exposures with indexes
S&P 500: Volume Comparisons
5 Most Actively Traded Stocks
493
400
-46%
300
268
200
100
Volume (millions of shares)
1.5
500
Volume (millions of shares)
5 Least Actively Traded Stocks
1.461
-34%
1
0.958
0.5
0
0
2011
2016
2011
2016
Sources: Tradable Securities from the Federal Reserve Board of New York, Quarterly Trends for Consolidated U.S. Banking Organizations Q1 2016,
http://www.newyorkfed.org/research/banking_researc/quarterly_trends.html ;Source for S&P 500 Volume charts, Bloomberg .
BETTER INSIGHT INTO PORTFOLIO RISK & RETURN FACTORS
3. Improved Risk Analytics
With greater transparency into their investment managers’ position holdings in the years postGFC, institutional investors are now better at grouping & understanding their portfolio level risks.
Risk Factors Running Across Asset Classes
Real
Assets
Source: Citi Business Advisory Services based on inputs from Callan Associates
Inflation Sensitivity
Absolute
Return
Credit Risk: Ability to Repay
Bonds
Equity Risk: Ability to Generate
Earnings on Cash
ASSET CLASSES
Equities
Interest Rate Sensitivity
RETURN DRIVERS
An enhanced ability to view, slice
and dice their portfolio level risks has
led institutional investors to the
following realizations:
•
Each asset in a portfolio is
composed of a complex
set of risk factors
•
Risks run across asset
classes
•
Equities, bonds and
alternative allocations
(absolute return and real
assets) share many of the
same risk exposures
DEMOCRATIZED ACCESS TO QUANTITATIVE FRAMEWORKS
4. Impact of Emerging Technologies
Increased processing speed and real-time analysis of vast pools of data are democratizing access
to quantitative frameworks that were once only the domain of specialized investment firms.
“Today, your cell phone has more computer
power than all of NASA back in 1969 when it
placed two men on the moon.”
Dr. Michio Kaku, futurist and co-founder of String Theory.
Actionable Risk
Insights
Portfolio dissection and risk modelling
tools provide insights to identify the
factor exposures that make up
portfolio holdings and manage those
exposures in a timeframe that results
in meaningful impacts
Dynamic Index
& Factor
Portfolios
Improved processing power and
velocity enables the data crunching
required to dynamically reweight
indices or construct factor portfolios
in a cost-effective and timely manner
Falling Cost of Memory
Targeted
Portfolio
Construction
Once solely the domain of professional
wealth advisors, new robo-advisory
modelling tools can assess an
investor’s risk tolerance and return
targets in order to construct a well
diversified investment portfolio
available to individual investors via the
internet and mobile devices
Sources: Falling Cost of Memory Chart from “Let’s Talk Data Blog” , Phillip Johnson, http://letstalkdata.com/2014/04/falling-cost-of-memory-1957-to-present/ Quote: “A Modern Smartphone or a Vintage
Supercomputer: Which is More Powerful?”, June 14, 2014, http://www.phonearena.com/news/A-modern-smartphone-or-a-vintage-supercomputer-which-is-more-powerful_id57149
MASSIVE INCREASE IN LONG-LIVING RETIREES
5. Retirees & Self-Directed Investing
The population is ageing and living longer. Baby boomers have longer retirements to fund than
previous generations. Their children & grandchildren will have to wait longer to inherit what is left.
Changing World Demographics: 2015 vs. 2030
• By 2030, 16.9% (1.4 billion people) of the world’s projected population
(8.3 billion) will be aged 60+
• 45% of the expected population increase will be individuals age 60 or over
• The life expectancy of those retirees also continues to rise
Source: Demographic chart, U.S. Census Bureau, http://www.census.gov/population/international/data/idb/informationGateway.php Years of Retirement: Global Health & Aging Report, National Institute on Aging,
U.S. Health & Human Services, https://www.nia.nih.gov/research/publication/global-health-and-aging/note-about-data-behind-report
HIGH COSTS CAUSE ACTIVELY MANAGED FUNDS TO UNDERPERFORM INDICES
The value proposition that returns from active management offer sufficient outperformance to both
cover costs and beat their relevant benchmark is challenged by the actual performance data.
•
Data on the relative performance of active managers versus their underlying indexes seems to support
the efficient market theory -- few active managers were able to generate sufficient outperformance
to both cover the costs of their funds and still outperform their benchmark
SPIVA H1 2016 Scorecard: Percent of Time Indices Outperformed Active Managers
Fund Category
1-Yr
3-Yr
All Domestic U.S. Equity Funds
90.20%
87.41% 94.58% 87.47%
Global Equity Funds
75.35%
76.96% 82.45% 81.19%
Emerging Market Equity Funds
42.22%
77.42% 67.63% 81.94%
Investment Grade Long Funds
94.39%
97.32% 98.41% 98.21%
High Yield Funds
75.00%
80.47% 88.78% 96.62%
Emerging Market Debt Funds
74.65%
88.89% 92.31% 81.82%
49% or less of Active Managers
Underperformed the Index
Source: S&P Dow Jones Indices, LLC https://us.spindices.com
50-79% of Active Managers
Underperformed the Index
5-Yr
10-Yr
80%+ of Active Managers
Underperformed the Index
INVESTOR FLOWS MOVE OUT OF ACTIVE & INTO PASSIVE
AUM in passive strategies represents a growing share of the global asset management industry
and the rate of investor flows out of active and into passive is accelerating.
Growth in Passive AUM & Passive as Percent of
Total Industry AUM
• Since January 2014 net inflows into
Passive have been ~$1 Trillion,
compared to net outflows of -$668
Billion from traditional Actively
managed funds
• YTD inflows into Passive have been
$280 Billion and we are on track for a
record setting year of ~$560 Billion
Net New Investor Flows into Active & Passive Products net positive flows
• YTD outflows from traditional Active
are -$249 Billion, on track for a record
outflow year of -$498 Billion.
Source: AUM Chart: Citi Business Advisory Services estimates based on Global Asset Management 2016: Doubling Down on Data, The Boston Consulting Group,
https://www.bcgperspectives.com/content/articles/financial-institutions-global-asset-management-2016-doubling-down-on-data/ ; Flows: Citi Business Advisory Services based on data from eVestment, Preqin,
HFR, Strategic Insight, BlackRock ETP report, IMA, OECD, Towers Watson, P&I Lipper
ETF GROWTH BEGINS TO OUTPACE GAINS IN OTHER PASSIVE PRODUCTS
The dramatic growth in ETFs is coming not only at the direct expense of actively managed
funds, but is even outstripping growth of index mutual funds and other passive products.
Cumulative Flows into U.S. Domestic
Equity Funds: Monthly 2007-2015
Growth of ETFs
•
From 2007 to 2011, the number of ETFs in the
market place nearly tripled from 1,315 to 3,608
while assets nearly doubled, rising from $825B
to $1.5T.
•
Between 2007 and 2015, investors
pulled $835B from actively managed U.S.
equity mutual funds & put $1.2T in U.S.
equity passive funds
•
Growth since 2011 has continued apace. By
June 2016, there were 5,169 ETFs and a
record $3.1T AUM.
•
U.S. equity index ETF AUM rose from
$573B (43% of U.S. passive) to $1.76T
(49%) between 2007 and 2015
Source: ETF Growth: Citi Business Advisory Services analysis based on proprietary data subscription to Strategic Insight SimFund database. U.S. Flows: Note: Equity mutual fund flows include net new cash
flow and reinvested dividends. Data excludes mutual funds that invest primarily in other mutual funds. Source: ICI, 2016 Fact Book, www.ICI.org
PASSIVE PRODUCT INNOVATION DRIVES ADOPTION
ETFs overcome the disadvantages of SMAs and mutual fund wrappers and represent a
significant step forward in making a wide variety of index exposures affordable and liquid.
Source: Citi Business Advisory Services
PORTFOLIO CONSTRUCTION MOVING TOWARD SET OF DIVERSIFIED FACTOR EXPOSURES
The growing numbers and types of index trading products are making it easier to look through
asset classes as an organizing principle for the portfolio to factors as a new diversification option.
Current State Portfolio Construction
•
Today, the average institutional portfolio can be abstracted into
a matrix that combines the main asset classes (equities, bonds,
alternatives) with different selection criteria (style, geography &
macro sector/theme)
•
Many survey participants saw this use of asset classes as an
allocation framework as being too coarse
Future State Portfolio Construction
•
The range of index offerings - not only
around smart beta and risk premia, but
also style boxes and niche strategies - is
pushing the industry towards a
fundamental shift in how portfolios are
constructed.
•
Easy to access, low cost, ETFs, often
built around indices or risk factors, is
expanding investors’ portfolio
construction and beta capture
choices.
Source: Citi Business Advisory Services
THE FACTOR CUBE AS THE EMERGING CORE PORTFOLIO BUILDING BLOCK
The factor cube’s ability to provide a set of highly diversified beta exposures is likely to make this
the core portfolio building block for all investors with most realizing that exposure via ETFs.
Cost of Obtaining Returns
Higher
Foundational Building Block
Low
Broad
Accessibility of Return Stream
Limited
Use of Factor-Cube in Future-State Portfolio Construction
Diversified Index Exposure
Retail
HNW
QIP
Institution
Investor Type
•
More technically advanced institutional investors are already using this factor cube approach.
Those organizations indicated that 70-80% of their core equity holdings were allocated in
this manner
•
The institutional approach is likely to quickly work its way downstream to other investment
audiences - the main building blocks are readily available and can be found in low cost
ETF products
Source: Citi Business Advisory Services
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IRS Circular 230 Disclosure: Citigroup Inc. and its affiliates do not provide tax or legal advice. Any discussion of tax matters in these materials (i) is not intended or written to be used, and cannot be used or
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Citi believes that sustainability is good business practice. We work closely with our clients, peer financial institutions, NGOs and other partners to finance solutions to climate change, develop industry standards, reduce our
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focused on environmental and climate solutions.