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Which of the following is the most valid argument for including venture capital investments in a traditional multi-asset class portfolio?
Correct Answer: B
Venture capital is a separate asset class, and exhibits low correlations with other traditional asset classes. Therefore, venture capital offers potential for further diversification for a traditional assets portfolio. Venture capital investments are highly risky- more than 10% of them lose 100% of their values. Overall, they offer high returns in exchange for assuming high risk but not necessarily high risk-adjusted returns. The fact that a significant percentage of venture capital investments fail indicates that management's record of success is not a valid argument for venture capital investing.