Endowment Investment Management

Endowment Investing: Managing for the Long-Term

Having a long-term investment horizon minimizes the need to focus upon short-term results. For many U.S. college endowments, this perspective has afforded them the opportunity to allocate a significant portion of their assets to alternative investments. The first group of papers listed below focuses specifically on endowment investment practices such as these. 

We've also provided a guide for investment trustees, a ranking of college endowment returns, suggestions for non-profit spending policies, and several other papers of interest for long-term investors. 

Endowment Investing Papers

Using Listed Index and ETF Options in Endowment Risk Management (Nasdaq, 2019)

This paper looks at the impact of option-based equity strategies (such as buy-write or put spread collar overlays) on endowment portfolios.

University Endowments: A Primer (CFA Institute Research Foundation, 2019)

Perhaps because of their sophistication or the leeway within investment policy statements, some endowments have been among the first movers into new asset classes or strategies. But what have been the factors of success for endowment asset managers, and what lessons can be drawn from their investments?

Six Trends in College and University Endowments (Enterprising Investor, 2019)

This blog post covers six of the most prevalent trends that are influencing the field of endowment investing.

A Cash-Flow Focus for Endowments and Trusts (CFA Institute Research Foundation)

Should trustees disregard the market returns of the assets in their portfolios and focus instead on real cash flows that they generate?

Ranking Top Colleges by 5-Year Returns (Charles Skorina, Apr 2019)

The author presents a ranking of the top 100 college endowments by their 5-year average returns.

How do Financial Expertise and Networks Affect Investing? Evidence from Endowments

The authors look at a broad data set of 11,000 board members, analyzing whether their financial expertise is significantly correlated with higher total returns for endowment portfolios.

Long-term Investment Objectives

Institutional Investment Mandates: Anchors for Long-Term Performance (FCLT)

Asset owners, particularly pension funds and endowments, can often afford to have very long-term investment objectives. This study by FCLT (Focusing Capital on the Long Term) helps asset owners and asset managers to construct mandates that align with a long-term perspective.

Organizational Design and Long-Term Investing (Iverson and Warren, 2018)

How should asset owners or asset managers organize themselves, and what characteristics do they need to develop, in order to be successful in meeting long-term investment objectives?

General Investment Themes

Five year capital market expectations (UBS AM, Aug 2019)

UBS Asset Management presents their 5-year and 10-year return expectations for a variety of asset classes, which incorporate insights from current market and economic data.

Global Macro Outlook (AB, Sep 2019)

For compliance reasons, this paper is only accessible in North America and South America

The latest insights from AB's global team of economists, based on their in depth research.

A Primer for Investment Trustees: Investment Committee Responsibilities(CFA Institute Research Foundation)

Trustees and investment board members take on many responsibilities, including setting investment and governance policy, understanding the fund’s mission, establishing objectives, and assessing performance. This primer discusses those key issues.

Navigating climate scenario analysis: A guide for institutional investors (IIGCC)

Climate change presents a potential systemic risk to the financial system. This 60-page guide by the Institutional Investors Group on Climate Change aims to serve as a ‘how-to guide’ for institutional investors who are beginning to construct and conduct scenario analysis.

Factor Investing: The Risks of Deviating from Academically-Validated Factors (Scientific Beta, 2019)

Factor investing approaches have risen in popularity, but many of the factor definitions used within new investment products are far removed from the standard (academically proven) factors. Some methodologies may result in p-hacking and the use of irrelevant factors.

Endowment Spending Policy

Nonprofit spending policy: Focusing on the financials (Vanguard, 2019)

Vanguard discusses financial factors such as capital structure and the variability of revenue and expenses in the context of nonprofit spending decisions.

Non-profit spending policy options (Russell Investments, 2018)

For compliance reasons, this paper is only accessible in the United States

In this paper, spending policies for non-profits are broken down into two components: rate and methodology. Both impact the asset pool's overall sustainability, as well as the delicate balance between the interests of future beneficiaries and current beneficiaries.