Evaluate the portfolios held by a private DB pension plan, a sovereign wealth fund, a university endowment and a private foundation

Judge each portfolio against the investor's objectives and constraints. A DB plan's portfolio should hedge liability interest rate risk in proportion to its funded status and risk tolerance, with a return-seeking portion sized to the sponsor's strength. A sovereign wealth fund's allocation should match its purpose: liquid, short-duration assets for stabilisation or reserve funds, and growth and real assets for savings or development funds. An endowment can hold substantial alternatives if its horizon, governance and liquidity allow, with spending smoothed to reduce volatility. A private foundation typically faces a minimum annual payout and has no new inflows, so it needs more liquidity and less volatility than an endowment. The trap is evaluating allocations without reference to liabilities or spending.