Unigestion has launched a tool which provides a framework for allocating between private assets on a systematic and quantifiable basis.
As the allocation of institutional investors to private assets increases, more and more of them are diversifying their portfolios to include not only private equity but, for example, infrastructure, private debt, natural resources, timber, agriculture and other “real assets”.
However, for many it remains a challenge to determine the contribution of these asset classes to risk, return, correlation and other characteristics of their portfolios.
Based on academic research, Unigestion’s Private Asset Allocator enables institutional investors to determine their allocations based on their specific objectives (such as the need to boost returns, early cash distribution, decorrelation to listed assets, inflation protection or to meet regulatory capital requirements) and access a range of attributes unique to the private asset universe.
The new tool allows investors to define the objectives they seek to achieve with private assets and to rate these objectives on a scale of importance. The tool then provides an allocation recommendation across the various types of private assets in line with the investor’s objectives and calculates the key characteristics of the proposed portfolio.
The launch of the Private Asset Allocator demonstrates the significant opportunities for institutions to benefit from investment in private assets including outperformance arising from the “illiquidity premium”, lower exposure to volatility and access to untapped opportunities. Moreover, the vast spectrum of the private asset universe allows investors to take advantage of the characteristics specific to each individual asset such as inflation protection, current income or protection against drawdown.
Hanspeter Bader, managing director and head of private assets at Unigestion, says: “In what remains a challenging environment, it is vital institutions carefully assess allocations to ensure their investments deliver in line with their specific long term objectives. The launch of our Private Asset Allocator reflects the key role we believe private assets can play in this regard and further underlines Unigestion’s commitment to employing an investor-centric approach that provides comprehensive solutions tailored to individual requirements.”