---
title: "Portfolio construction | Altss Taxonomy"
description: "Portfolio construction is how an investor decides what to hold and in what proportions. Private markets add a problem that public portfolios do not have:…"
canonical: "https://altss.com/taxonomy/portfolio-construction"
---

Topic hub

# Portfolio construction

Portfolio construction is how an investor decides what to hold and in what proportions. Private markets add a problem that public portfolios do not have: capital is committed first and drawn later, so an investor has to plan commitments, cash flows and liquidity to reach and hold a target exposure. This hub covers [asset allocation](https://altss.com/glossary/asset-allocation), [commitment pacing](https://altss.com/glossary/commitment-pacing) and liquidity.

Sections run from setting the [strategic asset allocation](https://altss.com/glossary/strategic-asset-allocation) and the illiquidity premium expected for locking up capital, to pacing and liquidity ([unfunded commitments](https://altss.com/glossary/unfunded-commitment), [deployment pace](https://altss.com/glossary/deployment-pace), the denominator effect), and then to the construction of venture fund portfolios ([follow-on reserves](https://altss.com/glossary/follow-on-reserves)).

Not in this hub: choosing individual managers, which is in [Due diligence](https://altss.com/taxonomy/due-diligence), and measuring results, which is in [Performance and benchmarking](https://altss.com/taxonomy/performance-and-benchmarking).

Publisher: Altss LLCContent modified 2026-10-01

8 concepts

## Reference index

### Asset allocation

2 concepts

- [Asset Allocation](https://altss.com/glossary/asset-allocation)

- [Strategic Asset Allocation (SAA)](https://altss.com/glossary/strategic-asset-allocation)

Strategic asset allocation (SAA) is an investor's long-term target mix of asset classes, with permitted ranges, set by its governing body to meet stated return, risk and liquidity objectives and reviewed only periodically.

### Commitment pacing and liquidity

4 concepts

- [Commitment Pacing](https://altss.com/glossary/commitment-pacing)

Commitment pacing is the plan for how much new capital an investor commits to private funds each year, sized with a cash-flow model so that invested NAV reaches and holds the target allocation without straining liquidity.

- [Unfunded Commitment](https://altss.com/glossary/unfunded-commitment)

An unfunded commitment is the portion of an investor's capital commitment to a fund that has not yet been called and that the general partner may still draw under the limited partnership agreement.

- [Deployment Pace](https://altss.com/glossary/deployment-pace)

- [Dry Powder](https://altss.com/glossary/dry-powder)

### Venture fund portfolios

2 concepts

- [Venture Portfolio Construction](https://altss.com/glossary/venture-portfolio-construction)

- [Follow-On Reserves](https://altss.com/glossary/follow-on-reserves)

## Canonical URL

https://altss.com/taxonomy/portfolio-construction