Quantitative investment analyst
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Hi, I’m Shannon Lucas, a quantitative investment analyst in the multi-asset division, and I’m here to discuss the process we followed when constructing the portfolios for the T. Rowe Price Planning Service Models. The multi-asset division research team followed a three-step strategic portfolio design process as we do to create all our portfolios. First, we defined the desired portfolio characteristics. Our team, along with the multi-asset PMS and analysts, determined the key objectives, targeted investor profile, and desired portfolio outcomes.
Objectives for each portfolio include broad diversification across asset and sub-asset classes. Equity diversification across sectors, styles, regions, and market capitalization’s as well as fixed-income allocations that were constructed with the overall portfolio in mind. Next, we analyzed the potential portfolios. By implementing the robust range of techniques that we employ to analyze all our portfolios in multi-asset, we were able to fully understand the implications of the portfolio design.
For example, we considered historical returns while recognizing the potential for future asset class evolution. We examined how different funds interact with each other, and we appropriately stressed both the funds and portfolios to understand how they perform in different market environments, such as market sell-offs or inflationary environments. Finally, we developed the portfolios. We constructed the portfolios neutral asset allocations by considering the numerous insights from our analysis and determining which portfolios best met the set objectives and desired outcomes.
Additionally, we implemented processes for frequent reviews of the portfolios, their underlying funds, and the asset classes, to ensure that we continue to put forth the portfolios that represent our best thinking and meet the distinct risk profiles of our clients. Now a core differentiator for T. Rowe Price and the multi-asset division is our culture of collaboration. When constructing the portfolios for the T. Rowe Price Planning Service Models, we partnered closely with T. Rowe Price, equity and fixed income PMS, portfolio analysts, implementation specialists, and the target date, and allocation teams, as well as the individual investor’s group. All to build the best portfolios for our clients.
In the multi-asset division, we believe that a robust, disciplined, and collaborative portfolio construction process is critical to helping our clients achieve their goals. And when designing the T. Rowe Price Planning Service Models, that was our core objective.
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