CHAPTER 17Key Takeaways

Chapter 1: What Is an Asset Class?

  • Image The composition of an asset class should be stable.
  • Image The components of an asset class should be directly investable.
  • Image The components of an asset class should be similar to each other.
  • Image An asset class should be dissimilar from other asset classes in the portfolio as well as combinations of the other asset classes.
  • Image The addition of an asset class to a portfolio should raise its expected utility.
  • Image An asset class should not require selection skill to identify managers within the asset class.
  • Image An asset class should have capacity to absorb a meaningful fraction of a portfolio in a cost‐effective manner.

Chapter 2: Fundamentals of Asset Allocation

  • A portfolio's expected return is the weighted average of the expected returns of ...

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