Optimising Asset Allocation between Hedge Funds and Private Equity

State-owned investors (SOIs), including sovereign wealth funds and public pension funds, have $27 trillion in assets under management in 2020, making these funds the third largest group of asset owners globally. SOIs have become the largest and are among the most important private equity investors, and they are key investors in other alternative asset investments such as real estate, infrastructure, and hedge funds. SOIs are also leaders in promoting environmental, social, and governance policies and corporate social responsibility policies in investee companies. We document the rise of SOIs, assess their current investment policies, and describe how their state ownership both constrains and enhances their investment opportunity sets. We survey the most impactful recent academic research on sovereign wealth funds, public pension funds, and their closest financial analogs, private pension funds. We also introduce a new Governance-Sustainability-Resilience Scoreboard for SOIs and survey research examining their role in promoting good corporate governance. Expected final online publication date for the Annual Review of Financial Economics, Volume 13 is November 2021. Please see http://www.annualreviews.org/page/journal/pubdates for revised estimates.

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The study of mixed assets allocation based on Black–Litterman model

International Journal of Financial Engineering ◽

10.1142/s2424786321500225 ◽

2021 ◽

pp. 2150022

Author(s):

Jianwu Lin ◽

Mengwei Tang ◽

Jiachang Wang ◽

Ping He

Keyword(s):

Stock Market ◽

Asset Allocation ◽

Private Equity ◽

Equity Market ◽

Research Topic ◽

Allocation Model ◽

Quantitative Models ◽

Challenging Research ◽

Qualitative Models ◽

New Type

With Private Funds having a new type of license for asset allocation practice in China, comprehensive asset allocation cross private equity and stock market has received more attention. However, most of the studies focus more on the stock market, and asset allocation models for private equity market that are mainly made based on experience. Thus, the joint allocation of assets crosses both markets making it a challenging research topic. This paper introduces the Black–Litterman model into the private equity market, realizing the transition from qualitative models to quantitative models. It lays a solid quantitative ground for the mixed asset allocation model in both the markets.

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Operational Risk Management in Practice: Implementation, Success Factors and Pitfalls: Efficient Implementation for Midsize and Small Asset Managers, Hedge Funds, Private Equity Funds, Family Offices

SSRN Electronic Journal ◽

10.2139/ssrn.2170784 ◽

2012 ◽

Author(s):

Claus Huber ◽

Daniel Imfeld

Keyword(s):

Risk Management ◽

Hedge Funds ◽

Private Equity ◽

Success Factors ◽

Operational Risk ◽

Implementation Success ◽

Equity Funds ◽

Private Equity Funds ◽

Practice Implementation ◽

Asset Managers

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INVESTMENT STRATEGIES OF INSTITUTIONAL INVESTORS: SOVEREIGN WEALTH FUNDS VS ENDOWMENTS

MGIMO Review of International Relations ◽

10.24833/2071-8160-2013-6-33-117-126 ◽

2013 ◽

pp. 117-126

Author(s):

E. S. Biryukov

Keyword(s):

Real Estate ◽

Hedge Funds ◽

Institutional Investors ◽

Private Equity ◽

Investment Strategy ◽

High Yield ◽

Income Volatility ◽

Sovereign Wealth Funds ◽

The World

The paper considers two main original approaches to investing the assets of institutional investors (the total amount of their assets in the world is about 100 trillion dollars) – the one of Norway's sovereign wealth fund Global and approach of Yale's endowment fund. Fund Global with assets of $ 716 billion dollars is the largest institutional investor in the world, its strategy is based on the assumption that markets are efficient and their long-term growth lies in the balance of investment in stocks , bonds, and , since more recent time - in real estate. Financiers of Yale in the 1990s revolutionized the approach to investment, firstly, by reducing the proportion of stocks and bonds in favor of private equity and real estate, and secondly , by shift from investments in the domestic market to foreign markets. Not all institutional investors are ready to follow these strategies because of the risk of negative returns in times of crises, but in the medium- and long-term, these approaches allow to beat inflation. For example, Yale's endowment has grown since 1985 to 2012 from 1.6 to 19 billion dollars, and high yield allows to transmit 1 billion dollars (!) to the budget of the university annually. Endowment funds are one of the key sources of revenues of leading American universities. Analysis of the investment policy of endowment funds and sovereign wealth funds shows that fundamental changes in the concept of investing began to occur since the late 1980s - early 1990s . Institutional investors of both these types ceased to focus on conservative instruments - bonds and deposits , and use other options: Global - stocks , Yale – private equity , hedge funds, real estate investments , etc. With the expand of the spectrum of instruments in which the funds are invested the income volatility increases either, and therefore the institutional investors should be both transparent and explain to the public the motives of investment strategy changes.

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The Rise of Institutional Investors

10.31235/osf.io/2u6pg ◽

2019 ◽

Author(s):

Jan Fichtner

Keyword(s):

Mutual Funds ◽

Hedge Funds ◽

Institutional Investors ◽

Private Equity ◽

Short Term ◽

Equity Funds ◽

Private Equity Funds ◽

Important Position ◽

State Street ◽

Asset Managers

During the last decades, institutional investors gained an ever more important position as managers of assets and owners of corporations. By demanding (short-term) shareholder value, some of them have driven the financialization of corporations and of the financial sector itself. This chapter first characterizes the specific roles that private equity funds, hedge funds, and mutual funds have played in this development. It then moves on to focus on one group of institutional investors that is rapidly becoming a pivotal factor for corporate control in many countries – the “Big Three” large passive asset managers BlackRock, Vanguard and State Street.

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