New approach to investment allocation minimizes risk and maximizes returns.
Institutional investors struggle to decide how much to invest in things like venture capital and real estate. Instead of using historical data like usual, the authors suggest a new way to figure out the best mix of investments. They use a factor approach to compare different types of assets and see how they perform over time. By simulating different scenarios, they found that this method gives a better understanding of how a portfolio might change over time due to market changes and other factors.