Models and Building Blocks

The architecture of our investment process is designed around a series of single asset type building blocks. By combining these, we construct multi-asset class bespoke portfolios for our clients. Models (either house or bespoke) have been constructed and managed so that we can illustrate our portfolio construction techniques and our long-term performance.

Our building blocks can be broken down into a series of sub-categories with each based around a single asset class. Risk management, asset correlation and diversification are carefully considered at both the building block and portfolio levels.

A building block can have one stock (such as a single collective fund) or consist of more than 40 individual stocks, depending upon its purpose. Building blocks cover a range of asset classes from cash, bonds and equities to so called alternative investments, including hedge funds, private equity, property funds and structured products.

A building block may be a ‘model’ in its own right, or can be combined with other building blocks (via our asset allocation strategy) to form ‘house models’. Taylor Young house models all have individual benchmarks and are designed to meet specific risk-return objectives, consistent with standard client requirements. Models are then run on a very strict basis in order to illustrate the portfolio construction process and the associated mandate performance.

If a client has non-standard requirements, building blocks can be combined to form a bespoke model and new building blocks may be added as required.

This is a powerful, modular architecture which enables us to manage a wide range of specific and tailored mandates in a flexible but also in a well-controlled manner.