Set out the strategic choices in implementing an allocation, including how passive or active to be and which vehicles deliver each type of mandate

The first choice is how much active risk to take in each asset class, judged by market efficiency, the investor's belief in manager skill, fees, and governance capacity to monitor managers. Passive exposure can be delivered through index mutual funds, exchange-traded funds, separately managed index accounts, or derivatives such as futures and total return swaps, which also allow overlays. Active mandates can be pooled funds, separately managed accounts or limited partnerships for private assets. Factor-based or smart beta strategies sit between the two. A core–satellite structure combines a passive core with active satellites. The trap is ignoring cost and tracking error, or buying active management in a highly efficient market without evidence that the added risk will be rewarded.