Glossary

Weighing risk, return and real-world impact together from the start. Promoted by the Thinking Ahead Institute, though its own early study found no sustainability edge for TPA.

See also: Real-world outcomes / total portfolio outcomes; Universal owner

Sources: CFA Institute Research & Policy Center 2026, pp. 16, 40; Thinking Ahead Institute 2019, p. 7; Thinking Ahead Institute 2025, p. 21

CPP's two shared investment pools, one for active public and private strategies and one mainly for liquid securities. Its two pension accounts each own a different mix of them.

See also: Balancing portfolio; Active portfolio

Sources: CPP Investments 2026, section "Two-account, two-pool investment structure"; CPP Investments 2025, p. 7 §5.1

The part of a fund that differs on purpose from its cheap reference mix, such as private assets, chosen managers and tilts. Funds use the label in different ways.

See also: Reference portfolio; Actual portfolio; Balancing portfolio

Sources: GIC 2013, p. 23; CPP Investments 2026, section "Benchmark Portfolios"; CalPERS Board 2025, slide 10

How far a fund's results can drift from its reference portfolio because of management's own choices rather than the market.

See also: Active risk budget; Tracking error; Reference portfolio

Sources: CalPERS 2025, memo p. 2; CalPERS 2025, deck slides 7–8

The total amount of active risk the board lets management take, which management then shares out among its best ideas.

See also: Active risk; Active risk limit; Risk budget

Sources: CFA Institute Research & Policy Center 2026, p. 20; CalPERS 2025, memo p. 2; NZ Super Fund, FY2026 release

The hard ceiling on active risk, set by the board alongside the reference portfolio. At CalPERS it replaced a set of separate limits for private markets.

See also: Active risk budget; Tracking error; Formal Total Fund Risk (CalPERS)

Sources: CalPERS 2025, transcript p. 41; CalPERS 2025, slides 14–15; Meketa 2026, p. 1

What a fund really owns today, as opposed to the notional reference portfolio it is measured against. The term is NZ Super's.

See also: Reference portfolio; Value added (value-add); Active portfolio

Sources: NZ Super Fund, Actual Portfolio page

Return above what a matching passive alternative would have earned, after costs: the reward for skill rather than for simply carrying market risk.

See also: Beta; Value added (value-add); Funding (notional funding)

Sources: GIC 2022, sections "Policy and active portfolios" and "Alpha"

A group of similar investments, such as shares, bonds or property, used to organise teams, targets and reports. Under TPA, classes become tools rather than fixed buckets.

See also: Silo (asset-class silo); Factor lens; Strategic asset allocation

Sources: CAIA Association 2024, pp. 3, 13; CFA Institute Research Foundation 2026, Exh. 2

Studying a pension fund's investments and its promises to members together, to choose a level of risk the fund and its members can bear.

See also: Funded status; Risk appetite; Wet toekomst pensioenen

Sources: CFA Institute Research Foundation 2026, Exh. 3; CalPERS 2025

A short set of measures, such as return, risk, cost, liquidity and quality of decisions, used to judge a fund after the event instead of one benchmark number.

See also: Dashboard; Multiple comparators

Sources: CFA Institute Research & Policy Center 2026, p. 22; Thinking Ahead Institute 2019, p. 13

A cheap, liquid pool of index-like holdings that a fund trades to keep its total exposures on target and to absorb shocks. The term is CPP's.

See also: Active Pool / Balancing Pool (CPP); Portfolio completion; Active portfolio

Sources: CPP Investments 2026, section "Benchmark Portfolios"; CPP Investments Insights Institute 2026, p. 5; CAIA Association 2024, p. 20

A yardstick, usually an index or a mix of indices, used to judge whether a manager or fund did well. Under TPA it supports judgement rather than driving it.

See also: Reference portfolio; Benchmark hugging; Multiple comparators

Sources: CFA Institute Research Foundation 2026, p. 21; CFA Institute Research Foundation 2026, Exh. 2

See Tracking error

Value lost when people steer by a benchmark instead of by the fund's real goals. A Thinking Ahead Institute term, used to argue for TPA.

See also: Benchmark hugging; Gravitational pull

Sources: Thinking Ahead Institute 2019, p. 2; Roger Urwin, Thinking Ahead Institute 2020, web page; CFA Institute Research & Policy Center 2026, p. 20

Staying close to the benchmark to avoid looking wrong, even when a different portfolio would serve the fund better.

See also: Benchmark drag; Peer risk; False negative

Sources: CAIA Association 2024, p. 22; CPP Investments Insights Institute 2026, p. 4; Australian Treasury 2026

CPP's yardstick for its active and balancing strategies, built from public-market indices with similar risk. It took over that role from the Market Risk Targets.

See also: Market Risk Target; minimum level of market risk (CPP); Strategic Portfolio; Target Exposures (not a CPP term)

Sources: CPP Investments 2026, section "Benchmark Portfolios"; CPP Investments 2025, p. 9 §6.2; CPP Investments 2026, p. 20

The return and risk that come simply from being in the market, available cheaply through index funds.

See also: Alpha; Reference portfolio; Beta-equivalent funding

Sources: CalPERS Board 2025, slides 5, 6, 9

Paying for a new investment by selling cheap assets that carry the same market risk, so total risk stays where the board set it. CalPERS uses the idea.

See also: Funding mix (funding basket); long and short decision; Funding (notional funding); Beta

Sources: CalPERS Board 2025, slides 7–8; Wilshire 2025, p. 3

The people ultimately responsible for a fund. Under TPA they set goals, risk appetite and guardrails, then hold management to account.

See also: Risk appetite; Guardrails; Delegation

Sources: CFA Institute Research & Policy Center 2026, p. 14; Thinking Ahead Institute 2025, p. 5

A famous study of US pension plans concluding that the policy mix, not stock-picking, explained most of the swings in their returns. It became the intellectual root of SAA.

See also: Strategic asset allocation; Policy portfolio

Sources: CFA Institute Research & Policy Center 2026, pp. 1, 36; CFA Institute Research Foundation 2026, p. 5

A quick test of real TPA: can the fund, will it and is it allowed to act on whole-fund views? Drawn from a CFA Institute Research Foundation review.

See also: TPA-washing; TPA spectrum (maturity levels); Delegation

Sources: CFA Institute Research Foundation 2026, pp. 8–10, 17

The investment model associated with Canada's large public pension funds. CAIA places it among the institutional models that came before TPA.

See also: Total portfolio approach; Insourcing / outsourcing

Sources: CAIA Association 2024, pp. 3, 13–14

A senior role that looks after the whole fund's exposures, data, rebalancing and overlays day to day. The CFA guide notes the title is not yet widely used.

See also: Top-of-house; Portfolio completion

Sources: CFA Institute Research & Policy Center 2026, pp. 14, 31; CalPERS newsroom 2026

What a fund is naturally good at, such as its size and patience, versus what it has to build, such as people, systems and access.

See also: Earn its place; Insourcing / outsourcing

Sources: A. Ang, M. Brandt, D. Denison for the Norwegian Ministry of Finance 2014, pp. 8, 63–64; NZ Super Fund, Endowments page; CPP Investments 2026, p. 13

Every idea, old or new, must keep showing that it is the best use of the fund's next euro and next unit of risk.

See also: Earn its place; Opportunity cost; Marginal contribution

Sources: Thinking Ahead Institute 2019, p. 2; CFA Institute Research & Policy Center 2026, pp. 4, 40; CAIA Association 2024, p. 27

Judging a decision against what was knowable when it was made, and against the best feasible alternative, rather than against a fixed yardstick chosen later.

See also: Feasible-set evaluation (CPP); Verification horizon; False negative

Sources: CFA Institute Research Foundation 2026, pp. 38, 40

Fences around target weights inside which management may move without going back to the board. The Future Fund's board sets them.

See also: Guardrails; Active risk limit; Equivalent Equity Exposure

Sources: Future Fund Board of Guardians 2025, paras 2.9, 5.13(ii); CalPERS 2025, slide 14

The return an investment must beat to deserve its place: what the money would have earned in the assets sold to pay for it.

See also: Opportunity cost; Funding mix (funding basket); long and short decision; Earn its place

Sources: GIC 2013, p. 24; NZ Super Fund, RP page; CFA Institute Research & Policy Center 2026, p. 40

A live view of the whole portfolio from several angles, covering exposures, risks, liquidity and progress, used to run the fund week by week.

See also: Balanced scorecard; Guardrails

Sources: CFA Institute Research & Policy Center 2026, p. 22

The board keeps one stable total-fund yardstick, while management designs the detailed benchmarks and is judged on that design. Proposed in a CFA Institute Research Foundation review.

See also: Delegation; Benchmark; Reference portfolio

Sources: CFA Institute Research Foundation 2026, pp. 21–22, 37

The board hands defined decisions to management, with limits and reporting, while keeping responsibility for oversight.

See also: Board; Guardrails; Principal–agent problem

Sources: Thinking Ahead Institute 2019, p. 5; CFA Institute Research Foundation 2026, p. 25

See Smoothing and de-smoothing (private valuations)

CPP's phrase for changing the portfolio when it chooses to, not when a crisis forces it. It does not mean frequent trading.

See also: Dynamism; Preparedness; Relative value framework (CPP)

Sources: CPP Investments Insights Institute 2026, pp. 2, 4, 8

A fall in value from a peak to a later low, before any recovery.

See also: Risk appetite; Mission impairment

Sources: CFA Institute Research & Policy Center 2026, p. 8; GIC 2013, pp. 21–22

Changing the portfolio when conditions or goals change, rather than waiting for the next scheduled review. Sometimes the right move is to do nothing.

See also: Preparedness; Disciplined flexibility (CPP); Total portfolio approach

Sources: Thinking Ahead Institute 2019, p. 2; CFA Institute Research & Policy Center 2026, pp. 7, 38, 40

The standing test under TPA: a holding stays only while it keeps beating the alternatives for the fund's capital.

See also: Competition for capital; Opportunity cost; Cost of capital (hurdle)

Sources: CAIA Association 2024, p. 4; Investment Magazine 2026, P8; CPP Investments Insights Institute 2026, p. 5

CPP's way of describing any portfolio's risk as equal to that of a simple mix of shares and bonds, whatever the portfolio actually holds.

See also: Market Risk Target; minimum level of market risk (CPP); Equivalent Equity Exposure; Factor lens

Sources: CPP Investments 2025, p. 17 Glossary; CPP Investments 2025, pp. 6–7 §4.3; CPP Investments 2026, p. 131

The Future Fund's single measure of how much stock-market-type risk the whole fund carries, translating every asset into equity terms. It uses this instead of a reference portfolio.

See also: Reference portfolio; Risk appetite; Equity/debt risk equivalence (CPP)

Sources: Future Fund Board of Guardians 2025, paras 2.14(i), 5.13; Investment Magazine 2026, P4–P5

Splitting a fund's expected return into three parts: what cash earns, the reward for market risk and the reward for skill. NZ Super publishes one.

See also: Value added (value-add); Reference portfolio

Sources: NZ Super Fund 2026, SPE p. 5; NZ Super Fund, AR2025

Choosing which underlying risks, such as growth, interest rates, credit and currency, the fund should hold at its chosen total risk. CPP treats it as a separate decision.

See also: Factor lens; Market Risk Target; minimum level of market risk (CPP); Strategic Portfolio

Sources: CPP Investments Insights Institute 2026, pp. 6, 8–9; CPP Investments 2026, section "A Total Portfolio View"; CAIA Association 2024, p. 20

Looking through asset-class labels to the few drivers, such as growth, interest rates, credit and inflation, that really move returns.

See also: Look-through; Asset class; Exposure targeting

Sources: CAIA Association 2024, pp. 4, 13, 19; CPP Investments Insights Institute 2026, p. 2

A good strategy that looks bad on the scoreboard for years because of luck and market conditions, not poor decisions. CPP illustrates the risk with a model, not with history.

See also: Verification horizon; Benchmark hugging; Conditional performance evaluation

Sources: CPP Investments Insights Institute 2026, pp. 4, 12; Benefits and Pensions Monitor 2026, headline

CPP's way of judging a portfolio design by how it ranks among thousands of designs with the same risk that it could have chosen instead.

See also: Conditional performance evaluation; Exposure targeting

Sources: CPP Investments Insights Institute 2026, pp. 8–9

CalPERS' name for the two things its board now sets: the reference-portfolio mix and the active-risk limit. Together they replace a target asset mix with ranges.

See also: Reference portfolio; Active risk limit; Strategic asset allocation

Sources: CalPERS 2025, slide 5; CalPERS 2025, pp. 2–3; CalPERS 2025, transcript p. 41

A pension fund's assets compared with the value of the pensions it has promised. When the assets fall short, the fund is underfunded.

See also: Asset–liability management; Risk appetite

Sources: CalPERS 2025, slides 11–13

Treating every investment as if it were paid for by selling part of the reference portfolio, so that its true cost is visible.

See also: Funding mix (funding basket); long and short decision; Opportunity cost; Cost of capital (hurdle)

Sources: CFA Institute Research & Policy Center 2026, p. 21; GIC 2022; A. Ang, M. Brandt, D. Denison for the Norwegian Ministry of Finance 2014, p. 9

The blend of reference-portfolio shares and bonds sold to pay for an investment: the short decision beside the long one of what to buy. Its return sets the hurdle.

See also: Funding (notional funding); Beta-equivalent funding; Cost of capital (hurdle)

Sources: A. Ang, M. Brandt, D. Denison for the Norwegian Ministry of Finance 2014, pp. 74, 76–77, 119, 121

Who decides what, and with which checks. In practitioners' shorthand, a traditional asset mix keeps boards comfortable, while TPA asks more of their judgement and oversight.

See also: Board; Delegation; Guardrails

Sources: CAIA Association & Thinking Ahead Institute 2025, p. 9; Thinking Ahead Institute 2025, p. 4; CFA Institute Research & Policy Center 2026, p. 13

The steady temptation, even at leading TPA funds, to slide back to benchmarks and silos, especially in bad times.

See also: Silo (asset-class silo); Benchmark hugging; Peer risk

Sources: CAIA Association & Thinking Ahead Institute 2025, p. 15

The limits, checks and reviews that let management act freely but safely within the board's intentions.

See also: Board; Delegation; Control ranges

Sources: CFA Institute Research & Policy Center 2026, p. 4

Bringing all of a fund's money, risks and opportunities into one view before deciding.

See also: Total portfolio approach; Systems thinking

Sources: CFA Institute Research & Policy Center 2026, p. 40

A fund that keeps a traditional asset-mix benchmark but runs parts of its process with whole-fund thinking.

See also: TPA spectrum (maturity levels); Total portfolio thinking; Strategic asset allocation

Sources: CFA Institute Research & Policy Center 2026, p. 9; Thinking Ahead Institute 2025, p. 8

The risk of losing control of the portfolio's shape when markets move sharply and much of the fund cannot be sold. The Future Fund names it as a risk.

See also: Liquidity budget; Liquidity coverage ratio

Sources: Future Fund Board of Guardians 2025, paras 2.15(vi), 15.3

Whether a fund manages money with its own staff or hires outside managers to do it.

See also: Outsourced chief investment officer; Comparative advantage (structural vs developed)

Sources: CFA Institute Research & Policy Center 2026, p. 32; Thinking Ahead Institute & Future Fund 2025, CR pp. 39–40

The theory that the best portfolio changes over time as conditions change, so a fixed mix is best only in special cases.

See also: Intertemporal risk; Preparedness; Dynamism

Sources: CFA Institute Research Foundation 2026, pp. 1, 5

Risk looks different over a year, a decade or a lifetime, so short-term risk measures can mislead long-term investors.

See also: Intertemporal portfolio choice; Risk 1.0 / Risk 2.0; Verification horizon

Sources: CFA Institute Research & Policy Center 2026, p. 15; Thinking Ahead Institute 2025, p. 5

A fund's written convictions about how markets work and where it can add value, used to guide its decisions.

See also: Investment policy; Governance (comfy vs stretchy)

Sources: CFA Institute Research & Policy Center 2026, p. 19; NZ Super Fund, Beliefs page; Future Fund 2026

The committee that reviews big allocation changes and, under TPA, keeps the competition for capital honest.

See also: Board; Competition for capital

Sources: CFA Institute Research & Policy Center 2026, pp. 14, 25

The written rules for how a fund invests: its objectives, its risk limits and who decides what.

See also: Investment beliefs; Mandate; Governance (comfy vs stretchy)

Sources: Wilshire 2026, pp. 1–2; Meketa 2026, p. 1

Practitioner language for teams, outside managers and ideas working as one, with risk managed across the whole fund rather than mandate by mandate.

See also: One team, one portfolio; Silo (asset-class silo); TPA spectrum (maturity levels)

Sources: CFA Institute Research & Policy Center 2026, pp. 19, 40

Borrowing, or using derivatives, to hold more exposure than the fund's own money would buy.

See also: Overlay; Liquidity coverage ratio

Sources: CPP Investments Insights Institute 2026, p. 4; Wilshire 2026, p. 2

Treating the fund's ability to raise cash as a scarce resource that each hard-to-sell investment must pay for.

See also: Liquidity coverage ratio; Inflexibility risk; Real assets

Sources: CAIA Association 2024, pp. 27–28; Bridgewater Daily Observations podcast 2024, Ch. 8; Invesco 2026

A test of whether the assets a fund can sell or pledge quickly would cover its cash needs through a period of stress.

See also: Liquidity budget; Leverage

Sources: CFA Institute Research Foundation 2026, p. 30; CPP Investments Insights Institute 2026, p. 5; CPP Investments 2026, pp. 47, 135

See Funding mix (funding basket); long and short decision

Seeing what an investment really contains, its underlying exposures, rather than the label on the wrapper.

See also: Factor lens; Smoothing and de-smoothing (private valuations)

Sources: Geoffrey Rubin 2025, intro; Wilshire 2026, p. 3

The instructions given to a fund or manager: its objective, time horizon, risk limits and permitted investments.

See also: Investment policy; Delegation

Sources: Future Fund Board of Guardians 2025, paras 2.2, 5.3; CFA Institute Research & Policy Center 2026, pp. 19, 32

What adding or removing one more investment does to the whole fund's return, risk and liquidity.

See also: Competition for capital; Earn its place

Sources: CFA Institute Research & Policy Center 2026, p. 6; CAIA Association blog 2025, section "Liquidity and Fit Come First"

CPP's two share-and-bond mixes: the minimum market risk needed to sustain the pension, and the higher risk it chooses as its target, once called its reference portfolio.

See also: Reference portfolio; Benchmark Portfolio (CPP); Equity/debt risk equivalence (CPP)

Sources: CPP Investments 2026, section "Market Risk Targets"; CPP Investments Insights Institute 2026, pp. 7, 10; CPP Investments 2026, pp. 14, 18, 20, 43, 131

See Market Risk Target; minimum level of market risk (CPP)

The risk that a fund fails at its real job, such as paying pensions, rather than merely lagging a benchmark.

See also: Drawdown; Systemic risk; Risk appetite

Sources: CFA Institute Research & Policy Center 2026, pp. 8, 14–15; Thinking Ahead Institute 2025, p. 5

Judging a fund against several yardsticks at once, such as its reference portfolio, its goals, its peers and the risk it took, instead of one benchmark.

See also: Balanced scorecard; Benchmark

Sources: Thinking Ahead Institute 2026, SC p. 12; CPP Investments Insights Institute 2026, p. 10; CFA Institute Research & Policy Center 2026, p. 26

A culture in which everyone works for the whole fund's result, not for their own team's benchmark or bonus. The phrase is a Future Fund motto.

See also: Silo (asset-class silo); Joined-up / joined-up risk; Organisational alpha

Sources: Bridgewater Daily Observations podcast 2024, Ch. 2–3; CAIA Association 2024, pp. 4, 29–30; Future Fund 2026

The internal benchmark of NBIM, which manages Norway's fund, sitting between the Ministry's benchmark and the fund's actual holdings.

See also: Opportunity Cost Model; Verification horizon

Sources: A. Ang, M. Brandt, D. Denison for the Norwegian Ministry of Finance 2014, pp. 51–55, 106–107

What you give up by choosing one use of money over the next-best one.

See also: Cost of capital (hurdle); Funding (notional funding); Competition for capital

Sources: CAIA Association 2024, p. 14; NZ Super Fund 2026, SOI p. 10

A blueprint proposed for Norway's fund: the owner sets a cheap share-and-bond reference portfolio and a risk limit, and every active bet is judged against what funded it.

See also: Reference portfolio; Funding (notional funding); Operational Reference Portfolio

Sources: A. Ang, M. Brandt, D. Denison for the Norwegian Ministry of Finance 2014, pp. 9–11, 63, 72, 101

Extra value that comes from how well the organisation works, through governance, culture, talent and technology, rather than from any single investment.

See also: One team, one portfolio; Governance (comfy vs stretchy)

Sources: CFA Institute Research & Policy Center 2026, pp. 25–26, 41; Thinking Ahead Institute & Future Fund 2025, CR p. 4

Handing the chief investment officer's job, or much of it, to an outside firm. Some firms that promote TPA also sell this service.

See also: Insourcing / outsourcing; Delegation

Sources: CFA Institute Research & Policy Center 2026, pp. 3, 10; CAIA Association 2024, p. 36

Spreading money over so many bets that the fund ends up taking too little rewarded risk.

See also: Silo (asset-class silo); Active risk budget

Sources: Future Fund Board of Guardians 2025, para 2.5(i); CalPERS 2025, pp. 5–6

Derivative positions placed over the portfolio to change exposures, such as currency, interest rates or shares, quickly and cheaply.

See also: Leverage; Portfolio completion

Sources: CFA Institute Research Foundation 2026, Exh. 3; Future Fund Board of Guardians 2025, Table 1

The risk of looking worse than similar funds, even while your own goals are being met.

See also: Benchmark hugging; Gravitational pull

Sources: Future Fund Board of Guardians 2025, paras 2.15(ix), 5.6; CFA Institute Research Foundation 2026, p. 9

CPP's term for the risk that poor investment results force higher contributions or lower benefits.

See also: Mission impairment; Market Risk Target; minimum level of market risk (CPP)

Sources: CPP Investments 2025, p. 19 Glossary; CPP Investments Insights Institute 2026, p. 7

The board-approved long-term mix of asset classes, with target weights, that a traditional fund implements and is measured against.

See also: Strategic asset allocation; Reference portfolio

Sources: GIC 2013, pp. 22–23; GIC 2026, Box 3; CalPERS Board 2025, slide 10

The team and tools that keep a fund's cheap, liquid exposures on target and manage hedges, cash needs and transitions.

See also: Balancing portfolio; Top-of-house; Overlay

Sources: NZ Super Fund, Completion WP; CAIA Association & Thinking Ahead Institute 2025, p. ~15

Being organised to decide and act well as conditions change, rather than relying on a fixed plan made years ago.

See also: Dynamism; Intertemporal portfolio choice

Sources: CFA Institute Research Foundation 2026, pp. 1, 8; GIC 2022

The risk that people managing money act in their own interest, such as bonuses or job security, rather than in the fund's.

See also: Delegation; One team, one portfolio

Sources: Roger Urwin, Thinking Ahead Institute 2020, web page; CFA Institute Research Foundation 2026, pp. 24–25

Physical investments such as property, infrastructure and timber. Private ones are often hard to sell and valued only occasionally.

See also: Smoothing and de-smoothing (private valuations); Liquidity budget

Sources: Future Fund Board of Guardians 2025, Table 1; Wilshire 2026, p. 3; GIC 2026, p. 20

What investments do to society and the environment, and the whole-fund result that combines money, sustainability and mission goals.

See also: 3D investing; Universal owner

Sources: CFA Institute Research & Policy Center 2026, p. 41

Selling what has risen and buying what has fallen to get back to the intended mix: a disciplined way to buy low and sell high.

See also: Balancing portfolio; Control ranges

Sources: A. Ang, M. Brandt, D. Denison for the Norwegian Ministry of Finance 2014, pp. 14, 17

A simple, cheap mix of listed shares and bonds the fund could always hold instead. It states the board's risk appetite and is the yardstick for active decisions.

See also: Risk appetite; Value added (value-add); Opportunity Cost Model

Sources: CAIA Association & Thinking Ahead Institute 2025, p. ~19; CFA Institute Research & Policy Center 2026, pp. 20, 41; NZ Super Fund, RP page

CPP's rule that all active strategies, new or existing, compete for capital on their extra return after all costs, including the liquidity they use.

See also: Competition for capital; Disciplined flexibility (CPP)

Sources: CPP Investments Insights Institute 2026, pp. 6–8

Robustness: a portfolio that holds up across many possible futures. Resilience: an organisation that can absorb shocks and adapt over time.

See also: Preparedness; Guardrails

Sources: CFA Institute Research & Policy Center 2026, p. 8 fn. 2; Thinking Ahead Institute 2026, SC pp. 3–4

Traditional risk management, built on volatility and correlations, versus a wider view that adds systemic risks, regime change, behaviour and long horizons.

See also: Systemic risk; Intertemporal risk

Sources: CFA Institute Research & Policy Center 2026, p. 14; Thinking Ahead Institute 2025, p. 5; Thinking Ahead Institute & Future Fund 2025, CR p. 16

How much risk a fund's owners are willing and able to take to reach their goals. The board sets it.

See also: Reference portfolio; Board

Sources: CalPERS 2025, deck slide 4; Future Fund Board of Guardians 2025, para 5.13; NZ Super Fund, 2015 Review App. 8 p. 30

A fixed total amount of risk that is shared out among strategies, each of which must use its share well.

See also: Active risk budget

Sources: GIC 2022; CAIA Association 2024, p. 14

Separate asset-class teams, each with its own benchmark and budget, optimising their own patch instead of the whole fund.

See also: One team, one portfolio; Asset class

Sources: CFA Institute Research & Policy Center 2026, pp. 3, 19; CFA Institute Research Foundation 2026, p. 19

Private assets are valued only occasionally, by appraisal, so their prices look calmer than their true risk. De-smoothing uses statistics to undo this.

See also: Real assets; Look-through

Sources: Wilshire 2026, p. 3; Wilshire 2025, p. 3; A. Ang, M. Brandt, D. Denison for the Norwegian Ministry of Finance 2014, pp. 120–121

The traditional approach: the board fixes target weights for each asset class, and teams fill those buckets and try to beat their benchmarks.

See also: Policy portfolio; Total portfolio approach; Hybrid (SAA/TPA)

Sources: CFA Institute Research & Policy Center 2026, pp. 3, 6, 34, 39

A more detailed long-term mix with the same total risk as the reference portfolio, showing the diversification the fund intends. CPP and GIC use it differently.

See also: Reference portfolio; Benchmark Portfolio (CPP)

Sources: CFA Institute Research & Policy Center 2026, pp. 20, 41; CPP Investments 2026, section "Strategic Portfolios"; GIC 2026, pp. 20–22

NZ Super's practice of leaning the portfolio towards markets that look cheap and away from expensive ones, then waiting patiently.

See also: Tactical asset allocation; Dynamism

Sources: NZ Super Fund, Tilting WP pp. 2, 4

Risk from the financial and economic system itself breaking down, through threats such as climate change or geopolitical shocks, which spreading investments cannot remove.

See also: Risk 1.0 / Risk 2.0; Universal owner

Sources: CFA Institute Research & Policy Center 2026, pp. 16, 41

Seeing the fund as one connected system, where a change in one part affects the others.

See also: Holistic investing; Total portfolio approach

Sources: CFA Institute Research & Policy Center 2026, pp. 2, 29, 41

Short-term bets away from the strategic asset weights, while the strategic mix stays the centre of gravity. At the Future Fund, TAA means Target Asset Allocation.

See also: Strategic asset allocation; Strategic tilting (NZ Super)

Sources: CAIA Association & Thinking Ahead Institute 2025, pp. 18–19; CFA Institute Research Foundation 2026, p. 16; Future Fund Board of Guardians 2025, para 2.4

See Tactical asset allocation

Not a CPP term. CPP calls its target allocations for each strategy its Benchmark Portfolios, and uses lower-case 'exposure targets' for its Strategic Portfolios.

See also: Benchmark Portfolio (CPP); Exposure targeting

Sources: CPP Investments 2026, section "Benchmark Portfolios"; CPP Investments Insights Institute 2026, pp. 3, 5; CPP Investments 2026, pp. 19–20

A central function that sees and steers the whole portfolio, above the asset-class teams.

See also: Chief total portfolio officer; Portfolio completion

Sources: CAIA Association & Thinking Ahead Institute 2025, p. 31; CFA Institute Research & Policy Center 2026, pp. 21, 27

Running the whole fund as one portfolio: every investment is judged by what it adds to the fund's goals, not by which bucket it fills.

See also: Strategic asset allocation; Reference portfolio; TPA spectrum (maturity levels)

Sources: CFA Institute Research & Policy Center 2026, pp. 3, 6, 41; CFA Institute Research Foundation 2026, pp. 1, 3

CPP's machinery for turning its risk target into a portfolio, with risk and exposures set for the whole fund.

See also: Market Risk Target; minimum level of market risk (CPP); Balancing portfolio

Sources: CPP Investments Insights Institute 2026, p. 3; CPP Investments 2026, p. 17

Keeping the whole fund's goals in mind in every decision, even inside a traditional asset-mix structure.

See also: Hybrid (SAA/TPA); TPA spectrum (maturity levels)

Sources: CFA Institute Research & Policy Center 2026, p. 19; Thinking Ahead Institute 2025, p. 18

TPA is a spectrum, not a switch: funds sit somewhere between a pure traditional asset mix and a fully integrated one-fund model.

See also: Hybrid (SAA/TPA); Total portfolio thinking; Joined-up / joined-up risk

Sources: CFA Institute Research & Policy Center 2026, pp. 3, 19, 41; CAIA Association & Thinking Ahead Institute 2025, pp. 31, 34

Our label for adopting the TPA name without changing who decides, how people are paid or how success is judged. The warning comes from a CFA Institute Research Foundation review.

See also: Can act, will act, allowed to act; TPA spectrum (maturity levels)

Sources: CFA Institute Research Foundation 2026, pp. 17, 24, 32

How much a portfolio's return typically differs from its benchmark's from year to year. Some prefer 'benchmark deviation', because the gaps are chosen, not errors.

See also: Active risk; Active risk limit; Benchmark

Sources: CalPERS Board 2025, slide 12; A. Ang, M. Brandt, D. Denison for the Norwegian Ministry of Finance 2014, p. 31 fn. 14; CFA Institute Research & Policy Center 2026, p. 20

A large, long-term investor that minds the wider side effects of its whole portfolio on the economy and society, as the Thinking Ahead Institute describes it.

See also: Systemic risk; Real-world outcomes / total portfolio outcomes

Sources: Thinking Ahead Institute & Future Fund 2025, CR pp. 55–56

How much more, or less, a fund earned than its cheap reference portfolio, after all costs.

See also: Reference portfolio; Alpha; Verification horizon

Sources: A. Ang, M. Brandt, D. Denison for the Norwegian Ministry of Finance 2014, p. 22; NZ Super Fund, FY2026 release

How long you must wait before results can show whether a decision was right. It ranges from days for rebalancing to decades for strategic choices.

See also: False negative; Conditional performance evaluation

Sources: A. Ang, M. Brandt, D. Denison for the Norwegian Ministry of Finance 2014, pp. 54, 76, 95, 98

The Dutch law moving pension funds to new contracts. In its solidarity contract, one collective portfolio is split into protection and return parts for age groups.

See also: Asset–liability management

Sources: Werken aan ons pensioen 2024; APG 2026