The second portfolio reduced the equity allocation by 6 percent and added gold.
This is based on the average equity allocation recommended by Wall Street strategists.
If you look at the MSCI Emerging Markets Index, the benchmark allocation of equity allocation among the almost-advanced economies, you see that Argentina is not even among the top 22 countries in this second-tier bunch.
Some 9% of responding endowments indicated they were completely postponing making investments in private equity over the next year and 14% planned to decrease their private equity allocation over the long term.
The similarly sized Abu Dhabi Investment Authority has been cutting its equity allocation to the lower end of its target band of 40-55% of assets, and giving more to index-trackers and less to expensive active managers.
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Fund companies that manage target-date funds assume that young people will pick a faraway date where the allocation to equity is always very high.
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The euphoria many endowments have had for private equity resulted in the average endowment, pre-crisis, allocating 11.8% of assets to private equity, above the average allocation for all types of institutional investors, which stands at 8.8% today.
While he has been urging investors to ramp up their equity allocation to capture some of the potential upside, he has lately been telling clients to not neglect bonds, which he argues have continued to flash cautious signals.
According to a new survey by Preqin, a research firm, 42% of the largest endowments are above their target allocation to private equity.
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The characteristics of an equity portfolio can be customized to complement an overall asset allocation strategy in meeting long-term return and risk objectives.
The first is an aggressive allocation (red) that recommends 100 percent in equity until age 39, then shifts to bonds using 10 percent changes every 5 years (red line).
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According to a survey report released on Wednesday, 57% of responding endowments altered their private equity strategies as a result of the financial crisis by such things as reducing their allocation and future commitments.
In a down market, the 40% allocation to bonds could support distributions for ten years before any volatile risky (equity) assets would need to be liquidated.
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Individual investors boosted their equity allocations last month to nearly an 18-month high, according to the January AAII Asset Allocation Survey.
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Make a top-level asset allocation of 40% to short term, high quality bonds the balance to a diversified global equity portfolio of perhaps 10 to 12 asset classes.
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This is probably one of the most commonly presented charts by proponents of passive investing and even asset managers (equity mutual funds) who use static allocation, but manage actively inside that range.
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