For a normal portfolio what’s the usual 40 40 20?
What’s a “normal” portfolio? University endowment, for instance, would be completely different from a pension plan and both could be very different from most individual investors.
20% for alts is a bit high for most of middle market institutional clients.
ohai Wrote: ------------------------------------------------------- > What’s a “normal” portfolio? University endowment, > for instance, would be completely different from a > pension plan and both could be very different from > most individual investors. Agreed. I worked for a university system with both a pension fund and endowment and the latter had a much larger allocation to alternatives. Also, the equity/fixed income mix would also likely depend on whether the plan utilizes liability-driven investing (as does the corporate pension fund where I currently work) and on the funded status of the plan.
Working in private wealth, 40/40/20 is a model allocation for us. We take the “core” portfoio and allocate 100, 80/20, 60/40, 50/50, 40/60 and have a satelitte portfolio of 20-30% AIs depending on liquidity needs, risk tolerance, client constraints. That 30% includes hedge funds. We’re thinking of increasing to our “cap” on AIs from 20-30% to pick up more hedge fund exposure.
this is all so useless
Also depends on how you define alternatives. For example, many institutions use L/S equity hedge funds as part of their “global equity” allocation rather than as part of their “alternative” allocation.