The Evolution of Asset Classes : Lessons from University Endowments

This paper surveys the practice of asset allocation for larger U.S. university endowments by focusing on asset category definitions. Wide diversity today reflects the broad shift to alternative investments and the blurring of boundaries by investment funds and managers. A prominent example involves hedge funds. Numerous and divergent subcategories depict the current wide-ranging opportunities available. We point out the movement to define asset categories with reference to their target performance or underlying return drivers rather than traditional investment vehicle-types, and we speculate on future directions and what it means for the role of strategic asset allocation for institutional investors