Alternative Asset Classes: 10 top papers for asset allocators
The last quarter has seen some great papers published on alternative investing - here is our list of the top 10 papers. We've sneaked in an alternative investing paper from 2015 as well - Robeco's paper on illiquid assets - which has racked up over a thousand views!
GENERAL ALTERNATIVE INVESTMENT PAPERS
Global Alternatives Survey 2016 (Willis Towers Watson, July 2016)
This comprehensive 99-page document examines current trends within ten different alternative asset classes including hedge funds, private equity, infrastructure, real estate, illiquid credit and insurance-linked securities. The survey reveals how the preferences for alternative assets vary between different types of asset owner, and lists the top alternative asset managers within each category.
The New Prominence of Private Assets: Targeting outcomes (BlackRock, June 2016)
Once dominated by venture capital and private equity buyouts, private asset strategies are now numerous, diverse, and able to contribute to specific investment outcomes. This paper discusses this and the ways investment managers can manage risk and monitor potential over-concentrations in building private asset portfolios.
WHITE PAPERS ON ILLIQUID ASSET CLASSES
Investing in illiquid assets: A review (Robeco, 2015)
Is it worthwhile to invest in illiquid assets? What additional return from a liquidity premium should an investor expect for such investments, as compared to the reality, after the entry and exit costs are accounted for? In this paper, the authors discuss the evidence, both theoretical and empirical, on illiquid asset investments, commenting on potential diversification benefits of illiquid investments, and drawing attention to associated problems and risks.
Understanding the illiquidity risk premium (Willis Towers Watson, 2016)
Illiquidity risk is a potentially appealing means of generating additional yields in a low-return world. The authors of this 10-page document discuss three different dimensions of illiquidity risk premium that investors should demand for a given asset.
HEDGE FUND PAPERS
Institutional Investors in Hedge Funds Survey 2016 (JP Morgan)
This 76-page paper is the 13th annual survey of institutional investors in hedge funds by JP Morgan. It continues to help investors gauge the state of the hedge fund industry - trends and investment behavior. The report includes analysis of investors' criteria for selecting hedge funds, and examines investors hedge fund portfolios in 2015, before exploring future hedge fund flows and anticipated trends.
Factor Investing: From Traditional to Alternative Risk Premia (EDHEC, 2016)
This detailed paper by EDHEC-Risk Institute examines factor investing beyond traditional factors. It seeks to examine the best strategies for harvesting alternative long/short risk premia.
PRIVATE EQUITY PAPERS
Asset Allocation with Private Equity (Mark Anson, 2016)
Private assets such as venture capital and private equity have long been a thorn in the side of CIOs and asset allocators. They lack liquidity which means that it is difficult to model their return streams in a risk budget or asset allocation model. In this paper, the author seeks to correct the misspecification of these, and other, illiquid assets, showing how the parameters of the underlying distributions are commonly underestimated. A new method is presented that reveals the true distributional parameters of these illiquid asset classes.
2016 EY Global Private Equity Fund and Investor Survey
This 35-page report by Ernst & Young provides valuable insights into the global private equity fund industry. Over 100 finance execs and over 80 investors gave their opinions and observations for the report, discussing some of the opportunities and challenges ahead.
PAPERS ON INFRASTRUCTURE INVESTING
European Infrastructure Investors Survey 2016 (Deloitte, June 2016)
This 28-page paper by Deloitte provides important insights and analysis into the current state and outlook for European infrastructure investment markets. The authors believe that the infrastructure asset class will continue with its strong performance and provide stable and secure returns.
Global Listed Infrastructure: A Case for Investing (CBRE, July 2016)
Listed infrastructure attracts investors in different ways. It has a history of volatility and healthy returns; providing an increased level of liquidity versus private-market investments and transparency. Morningstar recently even added infrastructure as a separate mutual fund category, demonstrating that investors see global infrastructure as a distinct and separate asset class that deserves an allocation within a broadly diversified portfolio.