Asset Allocation Forum 2025

The Prudent Chimpanzee

Institutional investors often find themselves navigating a jungle of risks and opportunities, much like a chimpanzee in the wild.

These intelligent primates, despite their seemingly simple existence, instinctively practice a form of resource allocation that mirrors the principles of sound investing.

By observing their behaviour – and dispelling common myths about them – institutional investors can gain valuable insights into the art of asset allocation.

Myth #1: Chimpanzees Are Reckless and Chaotic – The Truth About Diversification

There’s a common misconception that chimpanzees are impulsive and disorderly, swinging from trees without a plan.

In reality, they are strategic and resourceful, carefully balancing their diets across fruits, leaves, and even small animals to avoid over-reliance on any single food source.

Until recently, the bull run of US stocks, led by the phenomenal Magnificent 7 technology companies, seemed poised to defy gravity indefinitely. In the short term, diversification didn’t seem to work, and any fund that underweight US equities performed relatively poorly.

That myth of diversification was finally busted with the S&P 500 correction in late March 2025, as history has repeatedly shown us.

A well-allocated portfolio spanning asset classes, geographies, and sectors is essential for mitigating risks and ensuring long-term sustainability.

Myth #2: The Colobus Monkey Dilemma

While hunting colobus monkeys provides a ‘high-return’ protein-rich meal for chimpanzees, it requires extensive coordination, energy, and engenders in high risks of failure or injury.

While such difficult ventures are highly rewarding, the chimpanzees balance these efforts with easier, more reliable food sources such as fruits, roots, nuts and leaves.

The lure of higher returns in private and alternative assets have seen investors actively chase the illiquidity premia. While these are important sources of alpha, they are certainly fraught with significant risks too.

A strategic blend of high-return investments and steadier, lower-risk assets is essential to ensure a risk-balanced portfolio.

Myth #3: Environments Are Stable – The Reality of Adaptability

Many assume that once a chimpanzee finds a thriving territory, it remains a safe haven indefinitely.

However, their world is ever-changing, with threats from predators, rival troops, and shifting food sources. To survive, they adapt—changing their routes, food choices, and social structures as needed.

The notion of a set-and-forget allocation strategy is foolproof.

The continuing fallout and global retaliations from the Trump trade tariffs potentially signals a regime change in the new world order, intertwined with complex economic, security and trade issues.

The era of the peace dividend in the past three decades is over.

The immediate term will witness increasing volatility, geopolitical risk and regulatory uncertainty. How should investor adapt their risk models to the new regime?

Additionally, how can the evolving nature of artificial intelligence complement the investment decision-making process too?

Investing with Primal Wisdom: The Art of Asset Allocation

The myths surrounding chimpanzees mirror the misconceptions that often plague institutional investing.

By learning from their behaviours – diversifying resources, balancing risks, adapting to change, thinking long-term, and leveraging collective intelligence – investors can craft resilient and high-performing portfolios.

We look forward to yet another robust and meaningful discussion at the 13^th annual Asset Allocation Forum for CIOs, capital allocators and senior portfolio managers.

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