To deal with these challenges, buyers face a normal menu of choices (Exhibit 1). To enhance the tradeoff between danger and return in portfolios, they’ll reallocate to asset lessons offering higher risk-adjusted returns, decrease correlations, or a little bit of each. In recent times, for instance, sure buyers have elevated their allocations to alternate options, together with illiquid personal belongings like personal fairness and actual property. Though this has been a profitable method, all these automobiles aren’t out there to many particular person buyers.
