Comments on: Asset Allocation Rules May Lead Institutional Investors to Reduce Real Estate Holdings

By: tompain

tompain — Wed, 12 Nov 2008 17:21:00 +0000

Private equity allocations are also a huge problem. Because they are not marked to market, their weight in institutions’ portfolios has grown dramatically. Worse, many institutions are still committed to provide additional capital when the PE firm calls for it. A number of institutions are facing serious liquidity problems because of this, and some have begun to try to sell their private equity holdings in the secondary market. These transactions will take place at a very deep discount.

By: Anonymous

Anonymous — Wed, 12 Nov 2008 15:35:00 +0000

So the argument here is that because stocks have fallen alot and in percentage terms more than real estate investment then a re balancing of investment portfolios needs to be done to keep the balance of investments by the likes of pensions at the stated values.
If you use this argument they ought to be massively selling treasuries as they have probably fallen less in value than real estate. This does not appear to be happening yet.
Not all pensions and funds stick to percentages and it is possible institutional investors are acting very differently to private ones.When more private investors have withdrawn from the markets then this may well happen. Sorry not really convinced on this one even though it appears on the surface to make sense.

By: Anonymous

Anonymous — Wed, 12 Nov 2008 12:57:00 +0000

Hmm. I’ve lost my shirt in tulip futures. And French
Panama Canal bonds. And the South Seas Bubble. But
Im doing fine real estate. Solution, buy more of 1-3?
Maybe asset allocation should be re-classified as a
faith based strategy?

By: Anonymous

Anonymous — Wed, 12 Nov 2008 08:05:00 +0000

because real estate holdings value are declining a lot as well, they may not have to sell…