Asset Allocation with Real-World Constraints
Free CFA Level III: Private Markets lesson in Asset Allocation. 24 min read, ~3,589 words.
Every real constraint moves the portfolio off the efficient frontier; the question is whether the deviation is justified. Asset size determines which asset classes are accessible (minimums for small portfolios, market impact for large ones). Liquidity constraints tighten during stress, exactly when liquidation costs are highest. Taxes are the most...
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What this lesson covers
- Content
- Example 1
- Example 2
- Common Mistakes
- Check Your Understanding
- Exam Shortcuts
Learning objectives
- real world constraints
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