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