Abstract
Alternative investments are generally the biggest differentiator between the asset allocation mixes of institutional investors, like pension plans or endowments, and individual investors. Whereas a major university endowment might have 50% or more of its portfolio invested with private equity managers or hedge funds, the average person normally does not have access to these kinds of investments in a typical 401(k) plan.
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Notes
- 1.
See various “Private Equity Quarterly Reports” sent to clients by Preqin over the last few years.
- 2.
To become a REIT, there are some legal tests that a company must pass, including distributing 90% or more of its income in the form of dividends. Some real estate companies may not pass this rule and therefore will not technically be considered REITs. However, most real estate mutual funds will invest in anything that is "close enough," including companies in the real estate industry that may not legally be considered REITs but are real estate businesses in every other sense.
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Correlations based on monthly observations.
- 4.
7% – 2% – (20% x 7%) = 3.6%
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© 2013 Michael C. Schlachter
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Schlachter, M.C. (2013). Alternative Asset Classes. In: INVEST LIKE AN INSTITUTION. Apress, Berkeley, CA. https://doi.org/10.1007/978-1-4302-5060-9_8
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DOI: https://doi.org/10.1007/978-1-4302-5060-9_8
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