Risk & Return: Yale's Long Term Expectations By Asset Class Yale's endowment report is an incredible resource for investors. One reason it should be required reading for trustees is the excellent discussion on asset classes. In the report, Yale discloses it's long term real-return expectations by asset class (we added 2% across the board to reflect inflation). The … [Read more...] about Risk & Return: No Free Lunch
Every month, Foundation Advocate chooses one aspect of foundation investment performance to highlight. This month we ask a very fundamental question, Who Should We Compare Ourselves To? Before answering this seemingly straightforward question about performance, it might be useful to establish a quick framework to place performance into context. Rather than lead with … [Read more...] about How are Foundations Doing? April 2019 Topic: Who Should We Compare Ourselves To?
The Endowment Model - Lots of Alternatives Assets If one were to look for a case study in the "endowment" model of investing, Yale is the first stop, after all Chief Investment Officer, David Swenson, literally wrote the book on it. This is not a discussion on its merits or shortcomings, merely a quick glance at the logic behind it. If you look at Yale's asset allocation, it … [Read more...] about The Endowment Model and Efficient Frontier in 2 Pictures
Similar Yet Distinct Many people think of foundations and endowments as interchangeable entities, and for good reason, as they have a fair amount in common. But if you peel back even the first layer of the onion, you will see structural differences between the two that can have important implications on their investment strategies. To be clear, we are discussing … [Read more...] about Foundations and Endowments: Cousins, not Twins
The Math is SimplePrivate foundations have $1 trillion in assets. An incremental 1% return on investment would yield an additional $10 billion....per year...every year.To put that in perspective, the additional $10 billion would equal the annual charitable support provided by 12 Ford Foundations, 36 Rockefellers, or 45 Carnegies - you get the picture. Better returns of just 1% … [Read more...] about 1% Better Returns – Implication for Charitable Giving