Abstract: Investment strategy is often viewed as synonymous with asset allocation.1 Asset allocation answers what asset classes to invest in and what would be an optimal mix of these. A large body of economic research suggests that asset allocation is the main driver of investment performance and that the added value provided by the selection of a particular asset within the class is minimal. While this may be debatable in the case of private equity, where selection is still viewed to be paramount, asset allocation is nevertheless a key concept in investing. Its fundamental justification is the notion that different asset classes perform differently in different market and economic conditions, and as a consequence, this type of diversification has been described as the 'only free lunch' available in financial markets.
Publication Year: 2014
Publication Date: 2014-01-01
Language: en
Type: book-chapter
Indexed In: ['crossref']
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