Funds waste their time on small allocations

According to a report by the investment consulting firm Greenwich Associates, many funds are making small allocations to private equity, with a very low chance of achieving any significant return. As more institutions start to invest in alternative asset classes, Rodger Smith of Greenwich Associates argues that they must up their allocations, rather than wasting resources on managing an insubstantial allocation. Whilst alternative investments can help in diversifying portfolio risk, investors must consider exploiting them more aggressively. This presents no problem for larger funds, however, smaller funds may benefit from fund-of-funds structures.

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