How to Keep and Grow Your Retirement Assets by Daniel Wildermuth

Author:Daniel Wildermuth
Language: eng
Format: epub
Publisher: McGraw Hill LLC
Published: 2013-10-15T00:00:00+00:00

Performance-Oriented Assets

Up to this point, we have covered the primary asset classes that an endowment would use to generate performance in its portfolio. These investments all target high returns and low, or at least reduced, cross-correlation. The strategy is not complex, as the primary categories include only U.S. stocks; foreign developed market stocks; emerging market stocks; real assets such as real estate, oil and gas, and traded commodities; private equity, including hybrid debt offerings; and absolute return vehicles, which for individual investors will usually mean managed futures.

After diversifying their performance-oriented assets, endowments usually have much more confidence that this part of their portfolio will perform more consistently. As a result, they usually increase its percentage of their portfolios at the expense of the assumed more conservative category of fixed income. Yet, just because they reduce their fixed-income holdings doesn’t mean that they ignore the category.

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