Discussion paper

DP18352 Delegated Investment Management in Alternative Assets

Institutional investors segment into investors that hold simple portfolios of traditional equities and bonds, and investors that manage complex strategies in public and private markets. Investors implementing active portfolio management and holding diversified portfolios of equities and bonds are more likely to invest in alternative asset classes. The performance of institutional investors in alternative assets is significantly lower than in equities, suggesting that investors accept lower returns in exchange for diversification benefits. Institutions delegate 90% of their alternative investments to external managers and funds-of-funds. These intermediaries capture a large part of the potential diversification benefits through higher fees and lower returns.


Andonov, A (2023), ‘DP18352 Delegated Investment Management in Alternative Assets‘, CEPR Discussion Paper No. 18352. CEPR Press, Paris & London. https://cepr.org/publications/dp18352