Bob Browne is an executive vice president and chief investment officer for Northern Trust, which had $1.1 trillion in assets under management as of September 30, 2018. He is a member of Northern Trust's Operating Group and Management Group. He is also co-portfolio manager of the Northern Global Tactical Asset Allocation Fund.

Bob chairs the firm’s Investment Policy Committee, which sets investment policy for all Northern Trust groups in all asset classes. He is responsible for the investment group which manages multiple investment strategies including fixed income, active equity and passive investments. Bob joined Northern Trust in January 2009 and has more than 25 years of investment experience.

He holds a B.A. with a major in economics from the College of the Holy Cross. He also has a Masters in international business studies from the University of South Carolina. Bob is a holder of the right to use the Chartered Financial Analyst® designation.

I spoke with Bob last week.

Please tell me about the background behind your five-year forecast. Who is part of the team that develops it and how is it used within your asset management business? Beyond calling it a 5-year forecast, how would you succinctly describe the Capital Market Assumptions (CMA) report?

The Northern Trust CMA team, which is composed of senior investment professionals, gathers annually to develop long-term financial market forecasts. This global team of top-down investment strategists, bottom-up research analysts and client-facing professionals, adheres to a “forward looking, historically aware” approach. This involves understanding historical relationships between asset classes and the drivers of those asset class returns.

Part of the process is a rigorous discussion on how these relationships will evolve in the future. Our forward-looking views are encapsulated in our annual list of CMA themes, which – combined with our quantitative analysis – guides our expectations for five-year asset class returns.

The CMA return forecasts are combined with other portfolio construction tools, such as standard deviation and correlation to annually review and/or update the recommended strategic asset allocations for all Northern Trust multi-asset class strategies or products that we manage. All of them are rooted in our investment philosophy that says all investors should be compensated for the risks they take — in all market environments and any investment strategy.