Endowments and Foundations - Articles & White Papers

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…

Endowments are a substantial category of institutional investors. Some of these have been on the forefront of moving into new asset classes and new strategies, outperforming many other investors. What are the factors of success and lessons learned?

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 brief argues that, counter to common practice, trustees should turn their backs on market values and instead focus on the real cash flows that their assets can generate. For bonds, this would mean their real interest rate. For equities, this would mean their underlying profits. This focus on asset cash flows, rather…

The purpose of this white paper is to encourage conversation about the societal and financial benefits of clean energy investments and explore the barriers to such investments. University endowments have over $528 billion in assets, the ability to make illiquid investments, and long-term investment horizons. They are…

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

Before selecting a spending policy model, a nonprofit board should analyze the organization's statement of operations and capital structure to understand how variable revenue and expenses are. By reviewing integral aspects of its finances in addition to market factors such as prospective returns and inflation, board…

Using the unique laboratory of university endowments, we study the effects of expertise and networks on investment performance. Using detailed information on more than 11,000 unique board members for 579 university endowments, we show that the financial expertise of an endowment’s governing board is positively correlated…

Increasingly, college and university endowments are exploring and implementing strategies for endowment portfolios to more closely align their investments with institutional mission and sustainability goals. One strategy to do so is to invest with a gender lens—investing for financial return while promoting gender diversity…

Investment Consultants can play a central role incorporating environmental, social and governance (ESG) factors into an endowment’s investment strategy.Growing investor demand for portfolios that integrate ESG factors has spurred many investment consultants to work toward expanding their knowledge and use of ESG strategies…

This pilot research study assesses the annualised impact performance of direct impact investments in affordable housing. It addresses two sets of questions: (1) Feasibility: Is it possible to aggregate and compare impact performance data to generate insights? (2) Results: If so what social and environmental results are…

This briefing paper will focus on one clean energy investment opportunity: how to most effectively enable endowments to make investments in solar projects. It will provide guidance on three main approaches endowments can utilize to invest in solar: allocating capital across traditional asset classes in the investment…

This document is a primer to provide: (1) Strategic questions to consider. (2) Background and an overview of integrating sustainability factors for investment returns and a healthy, just,and sustainable society. (3) The status and trends in sustainable investing for college and university endowments. (4) A brainstorming list…

This work is the first substantial step towards clarifying significant market gaps through "heat maps” that identify under-invested market segments and highlighting direct feedback from ultra high net worth investors on the ways that wealth managers can better serve their impact investment objectives.

For the top endowments, these and other innovative portfolio decisions have created great, long-term alpha versus a global balanced benchmark with 70% stocks/30% bonds. Since asset allocation plays a large role in determining portfolio returns, it is interesting to compare how beta (or index fund) portfolios have compared…

Many institutional investors are concerned that a low-return environment is ahead, forcing stakeholders to reevaluate the prudence of their investment and spending policies. We present a framework to assess spending policies, and also analyze two prominent spending models across a variety of short-term and long-term metrics…

Why doesn’t the Modigliani-Miller theorem apply to the relationship between endowments (“firms”) and donors (“shareholders”), rendering an endowment’s investment policy neutral? We show that donor altruism (even if impure) breaks neutrality. Under a condition—which quickly converges to standard DARA preferences in the number…

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…

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…