Greenwich Roundtable Releases Extensive Best Practices Report on the Role of Alternative...

Greenwich Roundtable Releases Extensive Best Practices Report on the Role of
Alternative Investments in Portfolio Construction

"Required Reading for Managers of Pension Funds and Foundations and
Endowments"

GREENWICH, Conn., June 16 /PRNewswire/ -- Following last year's market
turmoil, the Greenwich Roundtable (GR) announced today the release of a white
paper on alternative investing, entitled Best Practices in Alternative
Investing: Portfolio Construction. The GR Education Committee's new study is
aimed at investors who actively invest in many types of alternatives and
covers private equity, real estate, venture capital, hedge funds and natural
resources. It is the fourth installation in a series of Best Practices
reports, following the organization's previous reports that focused on the art
and science of performing due diligence on hedge fund managers.

A valuable tool in today's difficult and volatile investing environment, the
paper provides a broad, thoughtful compilation of best alternative investing
practices from veteran, institutional fund managers. In addition, the paper
describes the advantages, principles, and challenges of weaving a portfolio of
alternative investments into an investor's overall fund. The importance of
continually focusing on risk management and maintaining control of liquidity
in constructing portfolios is firmly emphasized.

"This should be required reading for managers of pension funds and foundations
and endowments," said Ed Barksdale, Chairman of the Roundtable's Education
Committee, Chief Executive Officer of Stamford, CT-based Federal Street
Partners and a member of Duke University's investment committee. "Over the
past few years many managers became overly dependent on mathematical models to
build portfolios and manage risk. It's time to get back to basics and this
guide does just that, delivering a no-nonsense, straight forward approach to
alternative investing."

"This is the first overall review of qualitative approaches to include
alternatives into a broad portfolio of investments," said Steve McMenamin,
Executive Director of the Greenwich Roundtable. "The final result is designed
to raise the professional standards, to document the process and bring about a
greater awareness of best practices that had previously been passed along
orally amongst the world's most successful alternative investors."

"We began this project two years ago, after hearing concerns with leverage and
overvaluations in the market," said Aleks Weiler, the leader of the working
group that created the study and Senior Portfolio Manager with the CPP
Investment Board. "If there's one thing we learned last year, it is that
reliance on traditional, asset allocation portfolio construction techniques,
which are based on historical returns of asset classes, is not sufficient.
The current economic environment must be factored in as well."

The Greenwich Roundtable found that many institutional investors were not
placing enough emphasis on economic indicators like GDP growth and inflation
in constructing their portfolios. "The paper emphasizes the importance of
diversifying an investor's overall portfolio to provide both a degree of
readiness for inflation or deflation, as well as a growing economy," said
Rusty Olson, editor of the study and former CIO of the Eastman Kodak pension
fund.

The Roundtable's findings related to the economic cycle included the
following:

-- TIPS, physical commodities, and real estate are among the better
inflation hedges
-- Only two assets protect investors during deflation -- cash equivalents
and long-term government securities
-- Public equity, directional hedge funds, and private equity flourish
when
the economy is growing
-- High quality alternative managers with returns uncorrelated to the
stock
market can do well across all economic scenarios

The broad 74-page study is organized into seven chapters and focuses on the
qualitative, practical measures, which should be used in building a portfolio
of alternative investments. It concludes with a chapter on best practices for
institutional chief investment officers and their investment committees. In
addition to identifying the importance of the economic cycle in portfolio
construction, the study recommends:

-- Build alternative portfolios from the bottom up, limiting allocations
only to what is available in top quality managers
-- Avoid over reliance on mathematical asset allocation and risk models,
especially those too dependent on historical data
-- Ensure that the administrator and accounting firms are independent of
the manager
-- Maintain enough liquidity to stay the course
-- Focus on what is best for your fund as opposed to what your peers are
doing

The paper is written for foundations, endowments, pension funds, and other
investors. For information about obtaining copies or joining the Greenwich
Roundtable please visit www.greenwichroundtable.org.

About the Greenwich Roundtable:
The Greenwich Roundtable is a not-for-profit research and educational
organization located in Greenwich, Connecticut, for investors who allocate
capital to alternative investments. Its members collectively represent more
than $6.4 trillion in assets under management. The mission of the Greenwich
Roundtable is to educate sophisticated investors and to establish best
practices for limited partners.

SOURCE The Greenwich Roundtable

For information on the Greenwich Roundtable: Alex Poletsky, Greenwich
Roundtable, +1-203-625-4505; or Steve Bruce, Mary Beth Grover, or Victor
Morales, all of The Abernathy MacGregor Group, +1-212-371-5999