Total-Portfolio Approach: Framework in Practice

Research Paper
Laszlo Hollo, Dimitris Melas, Oleg Ruban
November 12, 2026

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The growth of private markets, a more volatile macroeconomic environment and a broader risk landscape have collectively exposed the limits of the asset-class silos of traditional strategic asset allocation, a framework built for a different investment world.

The total-portfolio approach (TPA) offers a more integrated alternative. Instead of managing each asset class against its own benchmark, TPA judges every investment decision by its contribution to total portfolio outcomes. In this paper, we show what the approach delivers in practice.

We follow a hypothetical U.S. public-pension plan through the stages of adoption. Its sizable private-market allocations make it harder to manage each asset class on its own.

Allocation decisions decreased volatility to below the fund’s risk appetite
Waterfall chart of total-fund volatility, in percent. It starts at 11.31% for the reference portfolio. Private real estate lowers volatility by 1.38 points and listed real assets by 0.32 points. Listed equity adds 0.10 points, private equity adds 0.52 points and defensive sleeves add 0.12 points. The total fund ends at 10.35%, below the reference portfolio.
Laszlo Hollo
Laszlo Hollo
Executive Director, MSCI Research & Development
Dimitris Melas
Dimitris Melas
Managing Director, MSCI Research & Development
Oleg Ruban
Oleg Ruban
Head of APAC Research & Development

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