A recent GMO client letter urges investors to “stop obsessing over their portfolios and pay more attention to factors beyond their holdings that are more difficult to measure” or risk missing their goals. This according to an article in Institutional Investor.

The letter–written by the firm’s head of asset allocation, Ben Inker–suggests that investors tend to overlook assets and liabilities outside of their portfolios because they lack “quantitatively well-estimated characteristics” they can use to measure performance. Instead, it argues, they use simpler analysis of historical returns, which has led them to create portfolios that solve the “wrong problem.”

“It is almost certain,” Inker writes, “that investors would achieve better overall outcomes if they recognized the risks outside of their portfolios that really matter and invested accordingly.”  He uses the example of a foundation focused on feeding a community’s poor versus one supporting cancer research: the former would know that the need to feed the hungry grows significantly during a severe economic downturn, while the latter would appreciate that the need for a cure is unaffected by economic circumstance. “The nature of those liabilities,” Inker writes, “strongly suggests that the two portfolios should have different allocations to stocks and bonds.”

Inker argues that the investment portfolios of workers should consider their job type as well as the number of years left to retirement. The article explains that although, “a teacher, a manufacturing worker, and a financial services employee may have the same tolerance for risk based on their age, their ideal portfolios can vary based on the volatility of their labor income and how it correlates to the stock market.”