Munis are on course to be one of the best performing asset classes in 2011.
Is, as the Web site proclaims, private equity the strongest long-term performing asset class in Calpers' portfolio?
Structured this way, Social Security seems to be a forced 401k-type contribution to a lousy performing asset class.
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At the end of each calendar year, the investor shifted funds from the better-performing asset class to the worst-performing asset class.
Its latest Bloomberg numbers show that 53 percent of those surveyed expect equities to be the best-performing asset class over the next year.
Rebalancing is difficult because it forces you to sell the asset class that is performing well and buy more of your worst performing asset classes.
Many clients are unaware of the historical returns for asset classes and may assume that it is easy to regularly select the top performing asset managers.
Private clients were unhappy, in part, because of the poorly performing asset-management arm, and, in part, because rich people (as opposed to very rich people) were treated as second-class.
Since no one can predict what the best-performing asset class will be in the future, diversification increases the odds of being in the right asset class at the right time.
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''Private equity has been a top-performing asset class over the past 10 years and will remain part of the portfolio, '' Jane Mendillo, who heads Harvard's endowment, said in a statement to Forbes.
Difficult though it is to be guided by reversion to the mean, there is something that sticks in the craw about devoting so much of a portfolio to the best-performing asset in recent history.
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The fund has a good track record of out-performing its net asset value return in strong market years and fund management has been a consistent buyer of shares (currently holding around a third of all shares outstanding).
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Did investors plonk their money into an asset class that had been performing strongly over the previous 12 months?
Time and again studies have shown how, across asset classes, the top-performing fund over one time period often ends up being at the bottom of the pack in subsequent years.
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In a multi-asset class portfolio, something is always going to be under-performing.
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Among its best performing funds are the Virtus Multi-Sector Short Term Bond Fund run by Newfleet Asset Management and its Emerging Markets Opportunities Fund run by Vontobel Asset Management.
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