By Mike Duncan | May 2026
Complex portfolios are surrounded by genuine expertise. Yet they still accumulate structural risk.
Legal counsel handles entity structure. Accountants manage tax and reporting. Investment advisers set allocation. Banks execute. Each does their job well. Each stops at the boundary of their mandate.
The layer between those mandates, where hedges are constructed, overlays interact, capital is consumed by collateral, and the portfolio’s behaviour under stress is ultimately determined, belongs to nobody. It is not in anyone’s scope. Nobody is measuring its drift. Nobody is asking whether the hedge framework still reflects the portfolio it was originally built to protect.
The expertise to examine that layer resides within banks. But bank structuring expertise operates inside a product mandate. Recommendations are shaped by what the bank can sell, not solely by what the client needs. What the market has not produced is that same expertise operating independently, with no products to sell and no transaction conflicts.
The result is a gap that persists unseen, often for years. Portfolios are not broken. Reports are clean. Governance has no reason to raise it. But the overlay is consuming capital and carry in a way that was never underwritten at current rates, the hedge ratio set at inception has never been revisited, and nobody has modelled what happens to liquidity pathways when markets move sharply.
This executive brief explains how the gap forms, what drift looks like in practice, why it persists even in well-governed portfolios, and six questions to find out whether the unowned layer is active in yours.
Read the Executive Brief
The Unowned Layer – The Advisory Gap in Most Complex Portfolios
