Key Takeaways
- • Olga Bezrokov, senior portfolio manager at Russell Investments, told the Canadian Investment Review's 2025 Risk Management Conference that rising market volatility is pushing asset owners to build more nimble portfolios.
- • Geopolitical risks and vague policy signals from central banks are prompting institutional investors to reassess current portfolio construction tactics.
- • Bezrokov urged investors, particularly pension funds, to pursue strategic asset allocations that are both structured and flexible, combining diversification with multiple alpha drivers beyond beta exposure.
- • Derivatives capabilities and overlays were highlighted as a way to implement or change strategies faster, since separate accounts or cash transfers can take days.
- • Real-time data was flagged as a tool for identifying exposed risks in any strategy as market conditions shift.
Summary
At the Canadian Investment Review's 2025 Risk Management Conference, Olga Bezrokov, senior portfolio manager at Russell Investments, said that an increase in market volatility is pushing asset owners to build nimble portfolios. According to Bezrokov, a combination of geopolitical risks and unclear policy signals from central banks is causing investors to reexamine how they navigate turbulent markets with current portfolio construction tactics. She posed the central question for allocators: how to make strategic asset allocation both structured and flexible enough to succeed across a range of market environments.
Bezrokov said investors have an opportunity to reinforce asset allocation strategies with adequate resilience and even some anti-fragility. Diversification is typically the first tool considered by institutional investors, particularly pension funds that need an asset mix capable of delivering returns to meet long-term objectives while withstanding volatility. To pursue this, investors are exploring multiple alpha drivers alongside beta exposures. These multi-dimensional strategies include quantitative, macro, thematic, active and passive approaches. "While having a diversified asset allocation is key to have access to different beta drivers, excess returns also matter," she said.
Pension plan sponsors are increasingly seeking portfolios that combine diversified allocations with alpha drivers, with particular focus on strategies that benefit across multiple market environments and, in some cases, during selloffs. Bezrokov said sponsors are researching which strategies can protect them when market conditions deteriorate.
Bezrokov also highlighted implementation efficiency as a challenge. Increased volatility raises the pressure to change positions quickly, and moving assets through separate accounts or cash transfers can take days, which can turn a proactive position into a late one. She said derivatives capabilities or overlays allow investors to be nimbler in volatile conditions. Finally, she suggested investors assess how much value they can extract from existing data and whether it can reveal exposed risks in any strategy in real time.
Bezrokov said investors have an opportunity to reinforce asset allocation strategies with adequate resilience and even some anti-fragility. Diversification is typically the first tool considered by institutional investors, particularly pension funds that need an asset mix capable of delivering returns to meet long-term objectives while withstanding volatility. To pursue this, investors are exploring multiple alpha drivers alongside beta exposures. These multi-dimensional strategies include quantitative, macro, thematic, active and passive approaches. "While having a diversified asset allocation is key to have access to different beta drivers, excess returns also matter," she said.
Pension plan sponsors are increasingly seeking portfolios that combine diversified allocations with alpha drivers, with particular focus on strategies that benefit across multiple market environments and, in some cases, during selloffs. Bezrokov said sponsors are researching which strategies can protect them when market conditions deteriorate.
Bezrokov also highlighted implementation efficiency as a challenge. Increased volatility raises the pressure to change positions quickly, and moving assets through separate accounts or cash transfers can take days, which can turn a proactive position into a late one. She said derivatives capabilities or overlays allow investors to be nimbler in volatile conditions. Finally, she suggested investors assess how much value they can extract from existing data and whether it can reveal exposed risks in any strategy in real time.
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