This report reviews portfolio returns, asset allocation, investment manager structures, and payout characteristics for 112 foundations. Analysis and exhibits include performance attribution, risk analytics, policy portfolio benchmarking, the impact of private investment programs on portfolio liquidity, the use of external managers by asset class, payout rates, payout distribution components, and payout objectives.
UK large-cap stocks are undervalued, but lack a clear near-term catalyst to unlock this value; mid-cap valuations are moving higher, but so too are earnings.
The answer depends on what kind of investor you are.
Diversified growth funds (DGFs) have garnered significant attention and assets—particularly amongst UK defined benefit pension schemes—as a less volatile source of long-term growth. DGFs can be valuable tools for pension portfolio management, but only if trustees understand what they are buying and how it fits into the context of the total portfolio. The simple bifurcation of the available products into traditional and absolute return strategies can be a starting point for trustees to help make sense of the market and set appropriate risk/return expectations across different market environments.
Fundamentals and share prices have come under pressure for natural resources equities this year, but we continue to believe they offer strong long-term return prospects.
Given a choice today between competing investment strategies, activists would not be near the top of our list, as the fawning attention over successful activists has narrowed the available opportunity set by boosting the available pool of money and drawing in new managers.
For value-biased investors, energy master limited partnerships (MLPs) are (somewhat suddenly) more appealing than they have been in several years.
The data and analysis in this report cover a variety of spending topics including spending rule types, the endowment’s support of operations, and effective spending rates. This year’s report also introduces the Cambridge Associates Endowment Spending Model.
While by some metrics low volatility stocks appear richly valued today, low volatility strategies are still relevant to many investors and can play an important role in portfolio construction.
Plans with active participants need a holistic, flexible risk budgeting approach—not a simple glide path