Second opinions become strategic tool for asset managers

External portfolio reviews are becoming a core strategic tool for wealth managers navigating volatile markets. For firms like Natixis Investment Managers, Blackrock, and Morgan Stanley, these second opinions deepen client engagement and sharpen their competitive edge.

Dutch asset manager Duisenburgh recently decided to exit an alternative energy strategy, a choice not taken lightly. Jules Looijmans, senior portfolio manager at the firm, said an external review confirmed what internal analysis had already suggested.

“The strategy had contributed significantly to our portfolio risk, but offered limited benefits in terms of returns or diversification,” he told Investment Officer. After a market rally in late 2024, the position was sold, supported by a second opinion from the Natixis IM Solutions team in London.

These second opinions, once considered optional, have become integral to strategic portfolio oversight. Asset managers have invested in specialised consultancy teams to provide detailed risk assessments. At the same time, the process discreetly highlights their own capabilities, platforms, and products.

Duisenburgh works annually with the Portfolio Clarity team at Natixis IM, a process Looijmans likened to a yearly car inspection.

Client insight and market feedback

Jochem Tielkemeijer, who oversees the service for the Nordics, UK, and the Netherlands at Natixis IM, said the analysis goes far beyond product pitching.

“If our analysis adds value for the client, that strengthens the relationship. It also offers us important market intelligence,” he told Investment Officer.

Since 2014, Natixis has reviewed more than 15,000 portfolios, conducting about 300 analyses annually in Europe. Clients may request reviews of specific funds. Reports sometimes conclude with proposals to evaluate the impact of certain strategies, such as adding a hard-currency emerging market debt fund, on portfolio risk and return.

“As a policy, we never suggest products on our own initiative,” said Tielkemeijer. “But we are happy to have conversations about the market, strategies, and asset classes.”

For Looijmans, that external confirmation had value. “It’s reassuring when the outcome aligns with what your own analysis already told you. Ideally, there should be no surprises.”

From data to interpretation

Blackrock and Morgan Stanley offer comparable services. Blackrock draws on its Aladdin platform; Morgan Stanley has its own Portfolio Solutions Group. But for Tielkemeijer, the follow-up conversation is where the real value lies.

“You can give someone a complicated report and say ‘good luck’, but what matters is interpretation,” he said.

Aladdin offers a framework that helps wealth managers and institutional clients understand why multi-asset portfolios behave as they do. Ursula Marchioni, head of investment and portfolio solutions at Blackrock, said her team supports clients by identifying both performance drivers and areas for improvement, whether through asset allocation or product selection.

That feedback can validate or challenge a client’s convictions, Marchioni said in an email. Others require help translating analysis into practical asset allocation decisions, she added.

Running complex multiple regressions

Looijmans agreed that the combination of analytical depth and guided interpretation was key. “They use professional software that can run complex multiple regressions, things I can’t do with the tools I have.”

Those regressions, based on passive style indices, highlight portfolio exposure to risk factors such as sector or style, and show how the portfolio deviates from benchmarks in terms of risk premia. Value-at-Risk is also broken down by sector or region, offering clarity on potential downside. (See sidebar)

Not all portfolio types are equally transparent. Fund-based portfolios, built with mutual funds or exchange-traded funds (ETFs), require deeper analysis than segregated mandates or direct equity holdings.

“If I invest in ASML, I know I’m heavily exposed to tech and growth,” Looijmans said. “But that’s much less clear with funds.”

Like a stress test

The annual review also serves as a stress test. Scenario analyses include past crises such as the Covid-19 pandemic, the eurozone crisis, and the global financial crisis. “It’s insightful to see how your portfolio would have reacted, and how that differs from the benchmark,” Looijmans said.

Marchioni confirmed that demand for portfolio consulting has increased in the past two years, driven by heightened volatility and new allocation challenges. Investors are asking more frequently for scenario-based analysis to navigate today’s market environment, she said.

Refined allocation needs

This trend also reflects more refined allocation needs. For example, clients use both equal-weighted and concentrated S&P 500 strategies to manage exposure to dominant stocks.

“We’ve helped many institutions understand how to generate alpha through more granular implementation tools,” Marchioni said.

What was once a luxury is now widely accessible. These services reflect a broader shift across the industry: more transparency, more customisation, and a greater need for interpretation. As Tielkemeijer put it, “Our analysis is a professional tool, not a sales pitch.”

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