The Vanguard Capital Markets Model, abbreviated in VCMM, is basically our econometric engine that we use for our capital market assumptions. So that's really the tool that we use in order to have a view on what returns, volatilities and correlations will look like into the future, five years from now, ten years from now, 30 years from now, for different assets and asset classes, so equities, bonds and so on and so forth, treasuries, credit and so on and so forth. So this is an econometric model that is based on our total leadership and technology that really provides not just a point forecast on what those returns are expected to be into the future, but also the level of dispersion around that. So the level of uncertainty associated with what returns into the future would look like. And this is crucial in order to really identify not just what we think markets and returns, how they will evolve into the future, but also making sure that we built in and we manage the level of uncertainty associated with these asset classes in the portfolio construction processes, in the portfolio optimisation approach. On top of that, the econometric model is, I would say, boosted by some qualitative judgments from the Investment Strategy Group, ISG, in order to provide a view on what we think that the long term, what we call steady state assumptions are for not just assets and their returns, but also variables associated with the real economy.

So GDP growth, level of inflation, industrial production, and other macro economic variables that are inputs to the model. So there is a qualitative layer from the Investment Strategy Group for our long term steady state equilibrium assumptions that is built in.

 The Vanguard Asset Allocation Model, abbreviated into VAAM, is our quantitive tool that we use for portfolio construction, portfolio optimisation, especially in the multi-asset space.

So that's really the model that we would use in order to come up with the perfect blend, optimised blend for different objectives, risk tolerance and investment horizons between asset and sub-asset classes, so equities, bonds, credit, treasuries, emerging markets and so on and so forth. The model has one of the key inputs actually uses the Vanguard Capital Markets Model, VCMM, that we just talked about, as one of the key inputs.

So the capital market assumptions are digested by VAAM in order to come up with the optimised asset allocation. One of the key features of VAAM is not just the blend between different passive exposures and beta type of risk, so the risk and return tradeoff between different assets and asset classes, but also allows for blending active strategies with passive strategies by taking into account the level of risk associated with specific active funds and strategies, and also the level of risk tolerance that investors might have towards active strategies compared to passive strategies.

There are certain behavioural traits that advisors can help their clients and investors to really avoid making sure that they don't put a drag in their long term success. So things, for instance, associated with rebalance, making sure that the portfolio is rebalanced in a regular way, consistently with the investment horizon and the objective, that is something that might sound trivial and obvious, but investors sometimes really forget about doing that.

Another one is associated with market timing. So many investors try to be smart and time the market and taking opportunities in order to create alpha, but that really very often is very hard to do and investors are not very successful in doing so and again, that over the long term can be extremely detrimental for the performance of the multi-asset portfolios.

Again, chasing performance associated with market timing is another trait that advisors can help their clients really to avoid and to stay away from. More generally speaking, advisors really through the behavioural coaching that they provide, are essential to make sure that investors keep a disciplined and balanced approach to portfolio construction. And again, when it comes to multi-asset portfolio construction, a safe place to start is a market cap approach that works very well for most of our clients in many environments and then investors and advisors can decide to make changes to that depending on what the goals might be.