Tilting for Yield

At the start of every year, foundation investment committees examine a number of portfolio optimizations to arrive at a CPI+5% return portfolio. The inflation term ensures that the corpus of the fund remains intact, and 5% covers the average annual distribution requirement. But is that the whole story? Traditional financial theory would hold that foundations […]

The Rewards of Private Equity’s ‘Unrewarded’ Risks

For many portfolios and asset allocation studies, private equity plays a starring role because it boasts high projected returns and low enough expected correlations that mathematical models such as mean variance optimization love it. But private equity is not magic. The reality is that valuation smoothing, company-size tilts, comparatively longer investment and holding periods, and […]