Asset Allocation
Asset allocation defines how capital is distributed across asset classes such as public equities, fixed income, private equity, and private credit. It is the core mechanism allocators use to balance return goals against risk, liquidity, and time horizon.
Definition
Asset allocation defines how capital is distributed across asset classes such as public equities, fixed income, private equity, and private credit. It is the core mechanism allocators use to balance return goals against risk, liquidity, and time horizon. Allocator Context Institutional allocators typically set strategic allocation targets and allow tactical deviations within bands. Family offices may allocate more opportunistically but still operate under implicit constraints shaped by liquidity needs and concentration tolerance. Decision Authority Strategic allocation changes usually require IC or board approval, while rebalancing and manager selection may be handled by CIO teams within policy limits. Why It Matters for Fundraising Managers win allocations when they can clearly explain portfolio role (diversifier, return driver, income, inflation hedge) and fit within existing sleeves and constraints. Key Takeaways Defines portfolio structure and risk posture Strategic shifts are governance-heavy Portfolio role drives approvals Clear “where you sit” beats storytelling