Allocation, allocation, allocation!

academic paper

The concept of traditional asset allocation is easy to grasp, typically referring to the process of determining portfolio weights to be applied to bonds, equities and cash.

However, because hedge funds go short as well as long, and invest across a multitude of financial markets and instruments, the concept of asset allocation in the alternative space is harder to define.

This then poses the problem of how to think about asset allocation within the context of hedge funds. As the hedge fund indu