I'm a Board member for a pension fund. I was growing increasingly uncomfortable with the discrepancy in returns being generated from the asset allocation in relation to the performance of the underlying funds.

Looking into our existing reports provided me with little explanation for the variance in performance. Although they were comprehensive and plentiful, they were not easy to understand and failed to point me in the right direction.

I contacted Alpha Finance Advisors and requested they review our reports, extract as much information as possible and report back in a clear and concise way.

They began by investigating the portfolio, looking at the details of the fund-of-funds we were invested in. Where possible they also looked into the individual funds themselves, in order to allocate them into investment 'buckets' (categories) consistent with their styles.

Using their analysis they were able to reconstruct the portfolio and provide a more precise picture of the actual asset allocation.

They discovered that some of the fund-of-funds we were invested in were engineered as portfolios in their own right, making each of them a balanced portfolio with their own imbedded risk mitigation structures. This meant that the consolidated exposure by asset class - once the structures were split and the components properly reallocated - was materially different from the one we had decided upon as the asset allocation committee.

Alpha Finance Advisors then analysed the fund-of-funds and their individual components using a combination of qualitative and quantitative factors. They analysed the time series of the various fund returns and compared them with a number of benchmarks they had previously profiled. They achieved this using their own in-house tools and processes, as well as other available statistical software packages.

Using the detailed report provided by Alpha Finance Advisors I was equipped with the information I needed to make my own educated judgment on the situation. It placed me in a stronger position to discuss the issue with the board. We were then able to address the problem with our appointed investment manager and ensure the portfolio performed as intended.