RISK RETURN & LIABILITY SPACE
In general asset managers operate in risk/return space and focus on the management of risk and return at a point in time.
Individuals live in liability space and need their assets to meet their needs not just at point in time but over time.
The portfolio problem is that of constructing, planning and managing assets to meet needs over time, given that risk and return at a point in time and, over time need to be managed at the same time.
Asset management, the management of risk and return at a point in time, is extremely well developed.
In fact, all the major techniques for the research, selection and management of stocks are well established. The management of assets within liability space is not developed. There is no one accepted methodology for structuring assets to meet liabilities over time.
The reason for this is that the boundaries of the universe of asset and liability management and the rules defining their relationship are neither universally known nor have they been formally accepted.
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