Asset Allocation and Private Markets: A Guide to Investing with Private Equity, Private Debt, and Private Real Assets

Asset Allocation and Private Markets: A Guide to Investing with Private Equity, Private Debt, and Private Real Assets : A Guide to Investing with Private Equity, Private Debt, and Private Real Assets

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The comprehensive guide to private market asset allocation Asset Allocation and Private Markets provides institutional investors, such as pension funds, insurance groups and family offices, with a single-volume authoritative resource on including private markets in strategic asset allocation. Written by four academic and practitioner specialists, this book provides the background knowledge investors need, coupled with practical advice from experts in the field. The discussion focuses on private equity, private debt and private real assets, and their correlation with other asset classes to establish optimized investment portfolios. Armed with the grounded and critical perspectives provided in this book, investors can tailor their portfolio and effectively allocate assets to traditional and private markets in their best interest. In-depth discussion of return, risks, liquidity and other factors of asset allocation takes a more practical turn with guidance on allocation construction and capital deployment, the 'endowment model,' and hedging - or lack thereof. Unique in the depth and breadth of information on this increasingly attractive asset class, this book is an invaluable resource for investors seeking new strategies. Discover alternative solutions to traditional asset allocation strategies Consider attractive returns of private markets Delve into private equity, private debt and private real assets Gain expert perspectives on correlation, risk, liquidity, and portfolio construction Private markets represent a substantial proportion of global wealth. Amidst disappointing returns from stocks and bonds, investors are increasingly looking to revitalise traditional asset allocation strategies by weighting private market structures more heavily in their portfolios. Pension fund and other long-term asset managers need deeper information than is typically provided in tangential reference in broader asset allocation literature; Asset Allocation and Private Markets fills the gap, with comprehensive information and practical guidance.
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Product details

  • Hardback | 320 pages
  • 176 x 251 x 24mm | 736g
  • New York, United States
  • English
  • 1. Auflage
  • 1119381002
  • 9781119381006
  • 1,342,766

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As fund managers struggle with lackluster returns from bonds and increased volatility from stocks, private market assets (private equity, private debt, and private real assets), have become increasingly interesting to pension managers and other asset allocators.

Asset Allocation and Private Markets: A Guide to Investing with Private Equity, Private Debt, and Private Real Assets delivers a compelling case for the need to adapt asset allocation strategies by integrating and allocating a significant proportion of assets to private market structures. The book offers readers practical and straightforward advice on mixing private asset with other asset classes by exploring returns on private equity, risk management, the endowment model, the construction and deployment of an allocation, and liquidity management.

Written from the ground up to provide asset managers with a single authoritative source on private asset allocation, the book describes how private market investments imply to deal with market imperfections and asymmetries of information and offers an extended range of investment strategies. The book covers strategies ranging from venture capital to turnaround capital, and private debt investing techniques including direct lending and distressed debt. Private real assets, including infrastructure, natural resources, and private real estate are also covered.

Perfect for institutional investors, pension funds, fund managers, sovereign wealth funds, asset allocation consultants, insurance groups, endowments, and foundations, Asset Allocation and Private Markets will also be of interest to sophisticated family offices and students and scholars in finance and business. The book is a vital consideration of asset classes that, together, represent a substantial and fast-growing portion of global wealth and are increasingly looked to by investors to enhance portfolio returns.
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Back cover copy

Praise for Asset Allocation and Private Markets

"This book represents an excellent summary, both precise and educational, of investment and allocation questions in private assets. It is just as suitable for a professional audience as for students who wish to go into the details of the allocation challenges and techniques in private markets."
--Noël Amenc, CEO, Scientific Beta; Head, SGX Index; Associate Professor of Finance, EDHEC Business School

"Overall well-written, addressing a number of very interesting, real-life topics of the illiquid market investor which are often not well understood by many market participants."
--Markus Benzler, Managing Director, UBS Global Asset Management

"Sophisticated institutional investors show an increased interest in private markets. They are ramping up their investments in this asset class, but this exercise remains difficult. The standard conceptual framework is not designed for less liquid assets. The authors provide a bridge between this framework and private markets, thus offering an integrated approach. Asset Allocation and Private Markets capitalises on extensive research and practical recommendations. It is essential reading for investors willing to implement and optimise their private markets strategy."
--Olivier Carcy, Global Head of Private Equity, Indosuez Wealth Management

"In this book, the authors give access to years of research in Asset Allocation and Private Markets. Obviously, there is no single recipe and one should adapt those principles to one's own needs and purposes, which themselves are impacted by exogenous factors. In a nutshell, this book provides the necessary foundations to navigate in a complex world."
--Laurent Guérineau, Managing Director, Eurazeo

"The nature of risk and return, and their implications for asset allocations, are well understood in public markets. But the application of these frameworks in private markets settings is challenging, due to a variety of data and conceptual challenges. This book provides an overview of these complex issues, with an eye to the very real issues facing practitioners in this arena."
--Josh Lerner, Jacob H. Schiff Professor of Investment Banking, Harvard Business School

"Asset Allocation and Private Markets convincingly addresses a very topical challenge: combining listed and non-listed assets in a unified framework. The authors overcome this difficulty by resorting to state-of-the-art theoretical and empirical approaches. The result is a practical framework, which can be used alone or merged into the usual asset allocation models. Synthetic, pragmatic, forward-thinking and innovative, this book is a must-read for fresh and experienced professionals, as well as scholars. It will undoubtedly become a reference book."
--Dominique Senequier, President, Ardian
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Table of contents



About the Authors

Data Sources

Abbreviations and Acronyms


Chapter 1: Sources of Capital: Nature, Constraints, and Objectives

Chapter 2: Asset Allocation: Models, Limits, and Adaptations

Chapter 3: Private Markets Investing

Chapter 4: The Three Dimensions of Investment

Chapter 5: Portfolio Construction and Management




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About Cyril Demaria

CYRIL DEMARIA is the manager of a series of venture capital funds, after serving as partner and head of private markets at Wellershoff & Partners and Chief Investment Officer in charge of private markets research at UBS Wealth Management. He is an Affiliate Professor at EDHEC Business School.

MAURICE PEDERGNANA is General Secretary of SECA, the representative body for private markets in Switzerland. He is professor at the Lucerne University of Applied Sciences and CIO at Zugerberg Finanz.

REMY HE is an investment analyst at Obviam, a Swiss investment firm focusing on private markets investments in emerging and frontier market.

ROGER RISSI is a lecturer at the Lucerne University of Applied Sciences and Arts (HSLU). His research areas include advanced capital market and portfolio theory, corporate finance, risk management and asset allocation with alternative investments.

SARAH DEBRAND is a Capital Markets Senior Analyst in a leading investment bank in London.
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