Asset Classes: Class Returns and Inflation + 5%
The “free lunch” provided by investing in alternatives comes from the ability to add diversification and reduce volatility without reducing investment returns. The endowment model focuses on investing in multiple asset classes with a projected return profile above inflation + 5%. The green shaded area to the right represents a theoretical basket of alternatives having the ability to provide for sustainable returns while potentially reducing volatility.
The graph to the right shows the hypothetical value of $1 invested in 1926. The returns used are purely hypothetical and for illustrative purposes only. Please see our definitions page for source information.