Institutional investing
Institutional investors run capital that cannot afford unforced errors. Their frameworks are worth borrowing from.
The endowment model
Popularised by Yale's David Swensen: heavy allocation to diversifying alternatives, long horizon, disciplined rebalancing, and manager selection over market timing.
Risk budgeting
Institutions size positions by the risk they contribute, not the capital they consume. A 5% allocation to a volatile strategy uses more of the risk budget than a 20% allocation to short-duration bonds.
Why alternatives
Traditional 60/40 portfolios rely on equities and bonds to zig and zag independently. In regimes where both fall together, alternatives that earn from other sources become the diversifier.