Institutional Mandates

Challenges for institutional investors

A central issue for institutional investors is determining the investment strategy for achieving a targeted return while adhering to the given risk parameters and regulatory requirements. 

This is a complex process that entails more than simply selecting a strategy that has achieved good results in the past. It calls for solutions that, by virtue of their investment strategy, will also generate an excess return going forward, amid complex and volatile capital markets.

The relationship between asset owners and asset managers presents a classic time-horizon mismatch. The owner has a specific set of investment objectives that correspond to its stakeholders, liabilities, return goals, and risk tolerance. The manager has a different set of stakeholders; the goals and internal incentives facing its portfolio managers and business leaders are likely to differ substantially from those of the asset owners whose capital it manages. Therein lies the challenge: how to ensure ongoing alignment of incentives and goals between two distinct institutions, often over a long period of time. Nearly a thousand investment professionals surveyed by State Street’s Center for Applied Research affirmed this challenge: “77 percent of asset owners said they were concerned that short-term incentives were not being aligned with long term objectives… More than half of asset managers (57%) said the same.” Institutional investors’ best tool in accomplishing this difficult goal is the investment mandate, the contract that governs these relationships and lays out the specific terms and parameters of their relationships.

Equity (Value, Small and Mid Caps, ), multi-asset/absolute return and direct investment mandates are managed on behalf of institutional investors.


The mutual funds offers include share classes specifically for institutional investors. Furthermore, the same investment strategies applied by these investment funds can be arranged within a bespoke fund mandate, taking into consideration specific investment restrictions.


Milton Financial Market Research Institute can manage numerous special fund mandates on behalf of institutional investors and has therefore established various interfaces with asset management companies.


We draw up detailed disclosures that meet both regulatory as well as client-specific requirements for the different groups of institutional investors that we serve.


Our client relationship managers have years of experience serving institutional clients. Investment strategy and performance meetings with client relationship managers and the portfolio managers of every available strategy can be conducted in the US and Europe. 

Individual management mandates modus operandi

A discretionary management mandate is a contract governed by civil law drawn up between the manager (the agent) and the investor (the principal) and signed in a face-to-face meeting after a request for proposals in the case of institutional investors.

Under the terms of the mandate, or discretionary management contract, the manager takes any initiatives that it sees fit to manage the investor’s portfolio for best results. Transactions are carried out without the investor’s prior consent and reported to him or her after the fact.

The management mandate is a contract, yet some clauses are obligatory, where management mandates must stipulate:

  • The investors’ status
  • The investment universe and management objectives
  • Benchmarks
  • The compensation procedure for the management company
  • The eligible financial instruments
  • Specific authorisation to trade in derivative markets, where appropriate
  • Reporting procedures (the contract must stipulate quarterly reports at the minimum, and monthly reports when derivatives are used) and performance measurement procedures.

Individual asset management under a mandate differs from collective management in several ways:

  • Investment services providers that are not the portfolio management company granting the mandate may perform both the financial management and custody functions,
  • The investor’s wishes are not implicitly represented when the voting rights attaching to the assets under management are exercised,
  • No separate tax and accounting treatment of the assets under management; the assets and liabilities in the portfolio under management cannot be separated from the investor’s other assets.

Requests for proposals

Institutional investors increasingly use requests for proposals (RFPs) when selecting companies to manage their investments. An RFP is a specification of requirements issued by the investor (with the help of a consultant in some cases) to several management companies with a view to delegating some or all of the investor’s financial management.

This process takes place in a formal and codified framework:

  • Before issuing an RFP, the investor must determine what the structure of its portfolio will be (management objectives, desired risk profiles, constraints, etc.). A set of technical specifications is then drawn up, along with a list of management companies invited to bid.
  • The investor then sends the specifications and a quantitative and qualitative questionnaire to the asset management companies and gives them a few weeks to respond.
  • Finally, a question and answer session is held with the management companies to examine some aspects in greater detail. This last phase may include a due diligence visit.