Liontrust Responsible Capitalism Report 2024 - Flipbook - Page 83
The TAA is reviewed and updated quarterly and follows these four steps:
STEP 1: SECRET SCORING
STEP 3: TAA MEETING
• Multi-Asset team members provide a score for each asset class,
sub-asset class, the overall market environment and a handful of
other factors. The scores are between 1 and 5, with 1 being the
most negative, 3 neutral and 5 being the most positive.
• In the TAA meeting, the Liontrust Multi-Asset team collates all of
the inputs from the above two steps and debates alongside other
views expressed. Every team member is encouraged to contribute.
• Each team member scores more than 20 different categories and
provides a justification for their scores. The scores are collated
ahead of the TAA meeting at which the scores are debated.
STEP 2: QUANTS
• Ahead of the TAA meeting, the team collates and digests a
range of quantitative inputs. These are designed to provide either
justifications for – or arguments against – the thrust of the views
expressed in the secret scoring.
• The quants data cover a wide array of asset classes and sub-asset
classes and provide a quantitative perspective on, for example,
the relative attractiveness of an equity market both against other
markets and against its own history.
• The output and component parts of the quants are assessed in
the TAA meeting and are used as an objective complement to the
more qualitative inputs from the Secret Scores.
• The output from the TAA meeting is the first cut of the team’s asset
class scoring grid, with each of the asset classes and sub-asset
classes allocated a score of between 1 and 5.
• The overall market environment is also scored out of 5.
STEP 4: INDEPENDENT INPUT
• The Liontrust Multi-Asset team is acutely aware of the risks of
“group think” and of anchoring to previous quarters’ scores.
• To reduce these risks of group think, the team comprises a group
of individuals with different backgrounds and experiences to
ensure there is a significant amount of cognitive diversity.
• To further combat the risks of group think and anchoring, the
Liontrust Multi-Asset team employs an independent consultant to
challenge the first cut of the asset class scoring.
• At the conclusion of the TAA process, scores that have stood up
to scrutiny are accepted and those that have not may be adjusted
modestly.
• The output from this meeting is the final TAA scorecard for the quarter.
• This scorecard informs the risk budget and the over- and under-weights
that the Multi-Asset team expresses through portfolio construction.
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