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Strategic Asset Allocation

In: Private Equity Unchained

Author

Listed:
  • Thomas Meyer

    (LDS Partners)

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.

Suggested Citation

  • Thomas Meyer, 2014. "Strategic Asset Allocation," Palgrave Macmillan Books, in: Private Equity Unchained, chapter 0, pages 40-53, Palgrave Macmillan.
    • Handle: RePEc:pal:palchp:978-1-137-28682-6_5
    DOI: 10.1057/9781137286826_5
    as

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