Strategic Asset Allocation

Thomas Meyer
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Thomas Meyer: LDS Partners

Chapter Chapter 5 in Private Equity Unchained, 2014, pp 40-53 from Palgrave Macmillan

Abstract: Abstract Investment strategy is often viewed as synonymous with asset allocation.1 Asset allocation answers what asset classes to invest in and what would be an optimal mix of these. A large body of economic research suggests that asset allocation is the main driver of investment performance and that the added value provided by the selection of a particular asset within the class is minimal. While this may be debatable in the case of private equity, where selection is still viewed to be paramount, asset allocation is nevertheless a key concept in investing. Its fundamental justification is the notion that different asset classes perform differently in different market and economic conditions, and as a consequence, this type of diversification has been described as the ‘only free lunch’ available in financial markets.

Keywords: Private Equity; Asset Allocation; Asset Class; Portfolio Company; Private Equity Fund (search for similar items in EconPapers)
Date: 2014
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Persistent link: https://EconPapers.repec.org/RePEc:pal:palchp:978-1-137-28682-6_5

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DOI: 10.1057/9781137286826_5

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