Evan Clark, Senior Private Market Analyst at the EDHEC Infrastructure & Private Assets Research Institute, led a session at SIPA Day 2026 in New York, organised by Scientific Infra & Private Assets (SIPA), part of PEI. Titled “The Total Portfolio Approach: Looking Through Private Assets in TPA,” the session examined how the approach changes portfolio construction and governance, and the challenges it presents when portfolios include private assets.

SIPA Day brings together the latest research and analytical insights across private equity and infrastructure, covering pricing, risk, performance and valuation.

    Evan’s session explored the growing adoption of the Total Portfolio Approach (TPA), its implications for institutional investors and the challenges of assessing private asset risk exposures when valuations are based on appraisal.

Key takeaways

• Beyond asset-class labels. TPA focuses on underlying economic exposures, weighing market exposures, alpha, liquidity and fees across investment opportunities.
• A different governance framework. Portfolio design and construction shift to the investment office, while boards govern through higher-level parameters, including a total-fund volatility target and an active risk budget.
• Private assets introduce greater uncertainty. Appraisal-based valuations mean underlying economic exposures cannot be directly observed and must instead be estimated using models, increasing the importance of board expertise and disclosure of risk assumptions.

Beyond the asset-class label

The Total Portfolio Approach represents a shift in how institutional investors consider portfolio construction.

Rather than focusing on allocations to individual asset classes, TPA looks through those labels to the underlying economic exposures of investments.

Within this framework, investment opportunities are assessed by considering market exposures, alpha, liquidity and fees across the portfolio.

The approach has been gaining traction among leading institutional investors. As highlighted by Clark, CalPERS became the first major US pension plan to formally adopt TPA in 2026.

This growing adoption brings attention to how portfolio construction and investment governance change when decisions are organised around economic exposures rather than traditional asset-class allocations.

Four components of the Total Portfolio Approach

Clark’s presentation highlighted four key components of TPA:

1. Diversifying across factors rather than asset classes
2. Competition for capital
3. Co-movement among asset classes during stress or shocks
4. Movement towards Total Fund Benchmarking, away from asset-class silos

Together, these components reflect TPA’s focus on underlying exposures and the total portfolio rather than individual asset-class allocations.

A changing governance framework

Beyond portfolio construction, TPA also changes the governance arrangements associated with a traditional Strategic Asset Allocation (SAA) framework.

Under TPA, portfolio design and construction shift to the investment office, while the board governs through higher-level parameters.

These include a total-fund volatility target and an active risk budget.

This shift changes the respective responsibilities of investment offices and boards, placing portfolio design and construction with the former and oversight through higher-level risk parameters with the latter.

The private asset challenge

Private assets introduce a particular tension within the Total Portfolio Approach.

Because private assets are valued through appraisal, their underlying economic exposures cannot be directly observed.

Those exposures must instead be estimated using models.

As Clark highlighted, modelled private asset exposures carry greater uncertainty than is the case for listed assets.

This creates a challenge for an approach centred on understanding underlying economic exposures across investment opportunities.

While TPA shifts attention towards those exposures, assessing private asset risk remains dependent on modelled estimates and their underlying assumptions.

What does this mean for investment governance?

The uncertainty surrounding private asset exposures has important implications for board oversight under TPA.

As portfolio design and construction move to investment offices, boards need sufficient expertise to understand the risks embedded in the portfolios being constructed.

Clark emphasised the importance of board-level knowledge of private asset risk and the assumptions used to estimate underlying exposures.

This expertise is necessary to ensure that directors understand the risks of portfolios designed by investment offices.

The presentation also highlighted the need for greater disclosure of risk assumptions in reporting, given the shift towards governing through economic exposures rather than asset-class allocations.

For institutional investors, the broader consideration therefore concerns not only how TPA changes portfolio construction, but also how private asset risk assumptions are understood by boards and disclosed in reporting.

The conversation continues at EIPA Day 2026, organised by the EDHEC Infrastructure & Private Assets Research Institute, on 8 December at Convene, 22 Bishopsgate, London.

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