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Real Assets and Liquidity: Lies, damned lies, and statistics
Alternative investment strategies continue to offer the potential for increasingly unique sources of enduring diversification. It may be helpful to examine the growth of alternatives. The NACUBO–Commonfund Study of Endowments over the past 10 years shows that in June 2012, endowments allocated 54 percent of AUM to alternative strategies. The alternatives allocation breakdown is 36 percent to hedge fund strategies, 25 percent to private equity, 15 percent to energy and natural resources, 13 percent to private equity real estate, 7 percent to venture capital, and 4 percent to distressed debt.
According to the report, “Alternative investment strategies are included in a portfolio to enhance returns, reduce risk, or both. They are fundamental to the structure of the so-called endowment model of investing which concludes that long term asset pools … can outperform investors with shorter term time horizons by providing capital to less efficient, more