This study is based on a survey that Cambridge Associates (CA) administers annually to our endowment clients. The report that follows summarizes returns, asset allocation, and other investment-related data for 312 institutions for the fiscal year ended June 30, 2020. Included in this year’s report are commentary and exhibits that are spread across six separate sections.
Our Investment Portfolio Returns section highlights performance results for select trailing periods. This section investigates some of the factors that contributed to the variation of peer returns and what made top performers stand out. Also included in this section is an overview on how methodologies for net reporting and incorporating private investments can vary among institutions when calculating performance.
Performance results of peers can be informative, but they are not necessarily the most effective benchmark for evaluating an endowment’s investment performance. Many endowments that underperformed the peer median in this study fared well when evaluated against their policy portfolio benchmark. This and other related topics are summarized in the Investment Policy section.
The Portfolio Asset Allocation section looks back at changes over the last decade and incorporates data on target asset allocations to lend insights into how institutions are altering their portfolios heading into the future. After considering these observations and trends in uncalled capital commitments, it is evident that average allocations to private equities will likely continue to increase in future years.
The number of managers that endowments use for their overall portfolio and within specific asset classes can vary widely. Our Investment Manager Structures section explores data on this topic, as well as implementation strategies for traditional assets (i.e., active versus passive management) and alternative assets.
Meanwhile, the Institutional Support section contains analyses that highlight how much nonprofit institutions rely on their endowments to support their annual operating budgets. Also included in this section are exhibits on spending policies, portfolio inflows and outflows, and operating funds.
Finally, our Investment Office Staffing and Governance section of the report takes a look at topics such as the number of personnel in the investment office and investment committee structure. Also included are analyses on how endowments utilize outside advisors/consultants and who has decision rights for asset allocation policy development and manager selection.