Endowments and Foundations - Articles & White Papers
Institutional research and articles covering investing at university endowments, foundations, non-profits and charities. These papers will be of particular interest to university endowment CIOs and other senior endowment investment management staff. A number of white papers examine endowment asset allocation - examining the so-called "endowment model" pioneered by the Harvard and Yale university endowments, represented by a well-diversified portfolio with a relatively high asset allocation to alternative investments. Other popular papers examine trends in university endowment investing and other drivers of endowment asset allocation.... Other topics of inveterest to endowment CIOs include university endowment investment performance and the potential for endowment investments to impact the world positively, investing according to an ESG or SRI philosophy. A key challenge for university endowments, foundations and charities is to withdraw cash in a sustainable manner, and a number of reports look at sustainable "withdrawal rates". A number of broader investment concepts are considered from an endowment/foundation perspective, such as the outsourced chief investment officer (O CIO) model, risk management and active equity investment. Further research articles and surveys in this section cover issues related to endowment investment performance, investment risk tolerance, and strategies for nonprofit institutional investors. This endowment investing topics tends to be followed not just by university endowment CIOs and senior investment staff, but also by those who are seeking to market investment products to endowment funds.
MFS surveyed over 540 asset owners, including DB and DC pension plans, endowments, foundations, and sovereign wealth funds, all of whom had a minimum of $100 million of institutional assets under management. Key themes of the survey include: the demise of the current US bull market, confidence in asset management,…
This FCLT paper addresses the challenge of managing multiple-horizon portfolios by outlining why such management is important, considering the barriers and hurdles, and then proposing a range of tools that funds could use, as appropriate to their situation.
Many research papers have demonstrated the shortcomings of popular spending rules—specifically, the tendency for rules to cause a loss of purchasing power over time. This study identifies the negative correlation between portfolio purchasing power and recommended spending rates as the primary cause of these shortcomings and…
In our last newsletter we looked at the number of women CIOs at big endowments*. Among 109 North American endowments over $1 billion we identified 20 (including one female director of investments and one CFO who liaises with their OCIO providers). That’s just eighteen percent – less than one out of five. For this issue we…
The prospect of diminishing returns for classic, and previously highly effective, 60/40 portfolios (60% equities, 40% bonds) is leading to changes in strategic asset allocation. Efforts to improve prospects include identifying macroeconomic regimes to guide investments and refining how diversification is understood. Interest…
Charities continue to face financial challenges at the moment with fundraising and contracts under pressure, and the need for transparency becoming ever greater. Layered on top of this is a significant DB burden for many charities, with regulatory pressure to pay off pension deficits more quickly. We’ve analysed the DB…
What trends are influencing endowment investing in today’s market? Christopher K. Merker, PhD, CFA of Robert W. Baird & Co discusses this in this brief blog post.
Long-term investors (LTIs), such as pension funds, super funds, sovereign funds, and endowments, are increasingly engaging in innovative investment activities. Many have sought to use their time horizon and their scale as comparative advantages in order to access financial markets on better terms, aligning their own…
We present the first estimates of investment returns and distribution rates for U.S. non-profit endowment funds, based on a comprehensive sample of more than 28,000 organizations drawn from Internal Revenue Service filings for 2009-2016. Endowments badly underperform market benchmarks, with median annual returns 5.53…
Total portfolio-level benchmarking for institutional investment pools can be approached in a variety of ways, based on which goals fiduciaries are attempting to achieve with each comparison. There are different types of benchmarks that can be used to accomplish specific goals. Portfolio-level benchmarks are typically based…
FTSE Russell’s sixth annual global institutional smart beta survey shows more asset owners combining sustainability parameters and risk premia within a single index—an approach we refer to as “Smart Sustainability.” Yet Europe is clearly leading the way globally; 77% of European asset owners expressed interest in applying…
The findings of our latest annual global survey of smart beta usage by asset owners (with a collective AUM of over $5 trillion), suggests that smart beta is now a standard tool in investors’ armories. For the first time, we found that the majority of asset owners—government organizations, corporations, unions, insurance…
The degree of involvement of institutional investors with cryptocurrencies has been widely discussed since the appearance of digital assets on the radar of financial markets over the past two to three years. The stance of asset managers, pension funds and hedge funds has been assessed, but the appetite and activity of…
The choice to use the services of an Outsourced Chief Investment Officer (OCIO) provider is one of the most significant decisions that a board is likely to make. This piece is focused on the four most important rules that Verus believes investors should understand, and OCIO providers should deliver upon.
This paper provides a framework for categorizing all potential investment consultant conflicts and biases as well as a series of mitigation steps that can help address those conflicts and biases.
This study provides an important extension of existing research on the performance of options-based strategies by considering the impact of the inclusion of option-based equity strategies in diversified institutional portfolios. Specifically, the analysis assesses the historical impact of the application of rules-based…
