INVESTMENT TOPICS

TIFF Education Foundation > Investment Topics > Asset Classes

Asset Classes

Asset Classes are often described as groups of securities that exhibit similar characteristics and behavior. Two well-known asset classes, for example, are stocks and bonds. (Click on the links below to open PDF files in a new browser window.)

"Alternative" Investment: Balancing Risks and Rewards
The principles that underlie most successful attempts to diversify institutional funds beyond domestic stocks and bonds are in fact the same principles that animate successful investment programs that are confined to these two traditional asset classes.

China Syndrome
There are multiple ways for even the most bullish Sinophiles to profit from the potentially rapid expansion of the Chinese economy without subjecting their capital to the high risk of permanent loss that direct investments in China arguably entail.

Emerging Markets Dugout Speech
Covers interesting facts and figures about emerging markets and discusses whether or not emerging markets is a distinct asset class.

Inflation-Linked Bonds
This dialogue attempts to synthesize the chief arguments for and against the proposed bonds — from both an investor's and a taxpayer's perspective. Patriotic sentiments aside, these two perspectives are diametrically opposed: if the I/L bonds prove to be superior investments, then by definition they will have increased the government's borrowing costs, and vice-versa.

Inflation-Linked Bonds Redux
The US Treasury is about to give investors a chance to bet directly on whether this nation can indeed do what an earlier running mate of presidential challenger Bob Dole tried but failed to do during his presidency two decades ago: WIN. (The president was Gerald Ford; the acronym stood for "Whip Inflation Now.") As has been widely reported, in January 1997 the Treasury will begin issuing "Canadian-style" inflation-linked (I/L) bonds.

Much Ado About Bonds
The only reason to hold bonds on a truly permanent basis is to hedge against a major deflation like the 1930s. And the only bonds worth owning in a major deflation are long-term, high quality, non-callable ones.

The Six Percent Solution
The absence of unarguably correct methods for allocating assets notwithstanding, there are unarguably incorrect methods for doing so — methods that, like modern notions of parenting (or schooling), tend to exalt pseudo-scientific precepts over common sense.

CoF 4/29/2002 – 6% Real or Bust?
There’s no such thing as an “ideal” asset mix or policy portfolio, even for endowed charities with identical spending rules. Why? Because the true test of the appropriateness of a given mix for a given endowment is whether it will produce the maximum return for whatever level of risk the endowment’s trustees are willing to bear.

NACUBO 1/17/2002 – 6% Real or Bust?
There’s no such thing as an “ideal” asset mix or policy portfolio, even for endowed charities with identical spending rules. Why? Because the true test of the appropriateness of a given mix for a given endowment is whether it will produce the maximum return for whatever level of risk the endowment’s trustees are willing to bear.

2 Percent Dilemma
How can trustees of endowed charities deploy their assets in a manner that will give them a “fighting chance” of maintaining purchasing power while consuming 6% of endowment assets per annum?

Tending Toward TIPS
While the TIPS market is older and more predictable than some of the Internet-related ventures that have induced certain institutions to allocate vastly more money to venture capital than to TIPS in recent years, TIPS are undeniably a relatively immature "asset class." This is offputting to some fiduciaries, especially those who believe that intuition should play no role whatsoever in policy formulation.

What If...
By devising creative answers to familiar questions – or by asking questions that others lack the creativity or courage to pose – investors can gain a material edge over the competition.

Why Not 100 Percent Stocks
An address presented by TIFF president David Salem at a symposium on endowment and foundation investing. It takes the form of a conversation between two people who have different views on the wisdom of investing 100% of an institution's assets in common stocks.

Fund of Funds Cure or Disease
In the unbiased opinion of the people who run them, funds-of-funds play a vital disciplinary role in the private equity marketplace. They purportedly do this by forcing general partners of the underlying funds in which they invest to do three crucially important things: one, adopt fee structures that make the GPs' interests as congruent as possible with the interests of their limited partners; two, eat their own cooking, so to speak, by investing a substantial portion of their own net worth in their own funds; and three, limit growth in assets under management as well as the number of deals done to levels consistent with their firms' staffing levels and deal flow.

Reflections on US Real Estate
The real estate market can reasonably be divided into two segments: the first includes those areas that cater to the technology industry (San Francisco area, Boston, New York City, west Los Angeles), and the second segment is everything else. In the technology-driven areas, the leasing market is incredibly hot and price insensitive.

Strange But True
The S&P 500 comprises not the 500 largest US stocks but rather 500 issues that a committee of Standard & Poors employees deems representative of the broad US economy. Due primarily to heavy M&A activity, but also to S&P's determination to keep its vaunted 500 Index "current" by replacing fading Industrial Age stocks with sexier Information Age stocks (e.g., America Online replaced the old Woolworth in 1998), there have been more than 260 changes in the Index over the last decade.

Taking the Long View
A fictional investment committee debates a host of scintillating investment policy issues, including sensible policy changes, adding private investments into a policy, and foreign stocks.

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