Research Publications Archive

Annual Review of Endowments: Investment Portfolio Returns

Fiscal year 2024 was the best-performing year for endowments since 2021, with most reporting double-digit returns. However, it was also the second straight year that the returns of diversified portfolios fell short of an investment option with heavier public allocations. As a result, the three-year return of the peer median underperformed a simple blended index weighted 70% global public equity and 30% fixed income. However, private investments continued to be a key return driver for the best-performing portfolios in the endowment universe over the long term. The Investment Portfolio Returns section highlights these contrasting performance themes for the short-term versus long-term periods.

Annual Review of Endowments: Benchmarking

The primary policy benchmark for most respondents is a static-weighted blend of indexes where the weightings align exactly or closely with the asset classes and target percentages specified in the asset allocation policy. Perhaps the most consequential benchmarking decision investors have had to make in recent years is how to represent private equity in the policy benchmark. The majority of respondents use a public index for that representation, and this cohort by and large saw significant underperformance versus their benchmark in 2024. Our Benchmarking section summarizes the various approaches that endowments use for benchmarking total portfolio performance and compares endowment performance versus policy benchmark returns.

Annual Review of Endowments: Asset Allocation and Implementation

There have been some minor shifts in endowment asset allocations in recent years that have diverged from longer-term trends. For example, over the last couple of years, average allocations to public equities have increased, while those to private equity and venture capital (PE/VC) have declined. However, these shorter-term changes seem to be driven by market dynamics where strong performance from public equity markets has naturally lifted those allocations within portfolios. When looking at data from an asset allocation policy perspective, the number of endowments decreasing their long-term target to public equity was double the number that reported an increase. The Asset Allocation and Implementation section covers this and other topics, such as the number of external investment managers and the types of investment vehicles (e.g., active versus passive) used.

Are US Equities Set to Repeat the Dot-Com Bust of the Early 2000s?

No, we don’t think so. The quality of companies today is higher and speculative excesses are less extreme. However, risks are elevated in mega-cap tech stocks, though less pronounced than in the dot-com days, and we recommend modest tilts to developed markets small-cap and value equities to help balance portfolios.

Sustainable and Impact Investing 2024: Insights and Perspectives

In our 2024 Sustainable and Impact Investing Survey, we reached out to Cambridge Associates clients for insights into how investors are thinking about sustainable and impact investing, as well as to identify changes in the field over the past two years and to understand possible future trends. Of the 255 clients who responded, 157 reported engaging in sustainable and impact investing, and this chart book explores trends in the investment structure, implementation strategies, and governance and measurement of sustainable and impact investing.