Delegated Investment Management in Alternative Assets

53 Pages Posted: 25 Jun 2014 Last revised: 11 May 2022

Multiple version iconThere are 2 versions of this paper

Date Written: May 1, 2022

Abstract

Institutional investors segment into investors that hold simple portfolios of traditional equities and bonds, and investors that manage complex strategies in public and private markets. Investors implementing active portfolio management and holding diversified portfolios of equities and bonds are more likely to invest in alternative asset classes. The performance of institutional investors in alternative assets is significantly lower than in equities, suggesting that investors accept lower returns in exchange for diversification benefits. Institutions delegate 90% of their alternative investments to external managers and funds-of-funds. These intermediaries capture large part of the potential diversification benefits through higher fees and lower returns.

Keywords: institutional investors, alternative assets, private equity, real estate, hedge funds, commodities, infrastructure, delegation, intermediation

JEL Classification: G11, G23

Suggested Citation

Andonov, Aleksandar, Delegated Investment Management in Alternative Assets (May 1, 2022). Available at SSRN: https://ssrn.com/abstract=2458224 or http://dx.doi.org/10.2139/ssrn.2458224

Aleksandar Andonov (Contact Author)

University of Amsterdam and CEPR ( email )

Plantage Muidergracht 12
Amsterdam, 1018 TV
Netherlands

HOME PAGE: http://www.aleksandarandonov.com

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