Asset allocation plays a crucial role in long-term investment strategies. How much of a portfolio should be invested in stocks vs. bonds? Should there be an exposure to foreign markets as well as domestic? What about alternative investments? All of these are common questions regarding an individual’s asset allocation. Devising an optimally allocated portfolio can be complicated and confusing, due to the circumstantial nature of the process. Meaning, the optimal, yet appropriate, asset allocation will be different for each individual, due to criteria such as age, investment objective, and risk tolerance.
Wealthy investors tend to have both the time and money to hire the best professionals to develop the best strategies for their investments. It is not always possible to exactly mimic the portfolio movements of these wealthy investors for a variety of reasons, such as institutional investment minimums, accredited investor status for particular investments, and portfolio liquidity. However, investment models, used by the affluent investor, for asset allocation are available. One of those models is that of major university endowments (Source: www.commonfund.org):
ASSET ALLOCATION AMONG LARGE UNIVERSITY ENDOWMENTS