This study is based on a survey that Cambridge Associates (CA) administers annually to our college and university clients. The report that follows summarizes returns, asset allocation, and other investment-related data for 159 institutions for the fiscal year ended June 30, 2020. Included in this year’s report are commentary and figures spread across six separate sections.
Investment Portfolio Returns 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 Investment Policy.
Asset Allocation 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. Manager Structures explores data on this topic as well as implementation strategies for traditional assets (i.e., active versus passive management) and alternative assets.
Meanwhile, Institutional Support contains analyses that highlight how much colleges and universities 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, Investment Office Staffing and Governance 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 use outside advisors/consultants and who has decision rights for asset allocation policy development and manager selection.