As institutional investors once again allocate capital to private equity real estate funds, they have the opportunity to re-think how best to avoid the pitfalls from the previous cycle. Early indications suggest that narrowed fund strategy mandates are among the improvements investors are seeking. Investors’ goals are well-intentioned: They aim to prevent strategy drift, keep a manager focused on his strengths and, most important, avoid the types of poor investments that doomed 2005 to 2007 vintage funds. However, poor investment performance was seldom due to broad strategies. Rather, it resulted from a combination of factors, including: (1) long-only and private market–only strategies (often with excessive leverage); (2) managers without the expertise to invest broadly across sectors and capital structures; and (3) the misalignment of incentives between manager and investor. In our view, enforcing stricter limits on managers’ investment parameters may actually exacerbate the