The endowment portfolios of 50 years ago are barely recognizable. As the class of 2024 looks to the future and FY 2024 closes out, Robin Wigglesworth captures the evolution of the endowment model of investing very well in his Financial Times Alphaville piece today, "American endowments’ complicated love affair with private equity" https://lnkd.in/gfEsKBUK. What will endowments look like in 50yrs? And how much will risk-taking and private assets — "with their more artisanal, occasional marking" — continue to be a primary feature? Robin gets at the elephants in the room when it comes to “Swensenian” portfolios — risk and liquidity — areas we continue to investigate. Stay tuned! Great to share space with the "doyen" Richard Ennis and Charley Ellis on these matters, as well as, of course, Benjamin Braddock and Mr. McGuire! MPI Research referenced in FTAV: "FY2023 Ivy Report Card: Volatility Laundering And The Hangover From Private Markets Investing" https://lnkd.in/es2x2wgE
Back in the inaugural 1974 NACUBO report on US university endowments, all were small, pretty boring and roughly bucketed by three broad investment approaches: total return, balanced and income-oriented. Today, it’s fair to say that every single one can be categorised as “Swensenian”, with the entire $840bn industry to some degree a tribute act to Yale’s late endowment chief David Swensen. That has translated into eye-popping allocations to private equity and venture capital, which together with hedge funds, infrastructure and other "alternative" investments now accounts for over half the capital invested. This is already causing some headaches and could cause a massive migraine if public markets suffer another puke. Universities used to only derive a modest slice of their budgets from endowments, but today the big ones derive up to a fifth of their spending from investment returns...