Asset allocation of university endowments

 

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A recent survey from NACUBO-Commonfund Study of Endowments provides interesting insights into the asset allocations for university endowments. Clearly, the larger funds have allocated more to alternatives and private assets and less to bonds, while the smaller funds appear to follow a more traditional allocation.

Nevertheless, the performance of endowments is not markedly different from that of a 60/40 portfolio. In fact, over three years, the endowments underperformed the classic mix, and over ten years, only the largest endowments seem to have beaten the simple benchmark. Does that mean 60/40 is better? No, but it does indicate that adding alternatives should be done carefully, with an eye to how they may compare to a simple approach.