The Total Risk Optimization approach to asset allocation and active risk budgeting includes both active and passive investments in a single optimization. The resulting frontier analysis seeks to offer an alternative to single and multi-step Markowitz optimizations: those strategies that seek a lower variance without sacrificing return through the combination of portfolio assets with returns that are less than perfectly positively correlated.
Instead, Total Risk Optimization is designed to combine asset allocation and active risk budgeting into a single study. Through this approach, Trident seeks to more efficiently account for the risks associated with active investments and the proliferation of alternative investments in hedge fund portfolios.
Interested investment managers can learn more at Trident Point Capital’s Web site www.tridentpoint.com .