Many defined benefit (DB) plan sponsors have concerns that the longer-term lockups required for private investments (PI) preclude them from taking advantage of this asset class. However, an exemption exists that allows ERISA-governed DB plans to transfer their PI programs to a separate investment pool if they need to—without liquidating them or sacrificing returns.
We believe insurance-linked securities can be a good fit for many pension funds looking to diversify their portfolios. This paper shares insights on how pensions can confidently underwrite and implement this asset class.
Creating portfolios customized to a family’s unique investment goals and risk tolerance requires ingenuity and flexible thinking. However, the execution of risk management should be more systematic, and families and their advisors should consider four components: strategic risk, implementation risk, portfolio monitoring, and communication.
By changing the PPA discount rate methodology to the Full Yield Curve approach, ERISA-covered US single-employer pension plans can significantly decrease or eliminate their variable rate premiums, reduce complexity, and simplify the risk management process.
For families of significant wealth, complexity is a natural byproduct of a well-managed portfolio, but there is such a thing as overcomplexity. This paper discusses a range of best practices to consider if and when a portfolio is encountering sluggishness, inefficiency, or ambiguity.
Inflation is having a moment—driving up the costs of delivering the nonprofit mission and making it more challenging to maintain endowment purchasing power. This environment highlights the importance of endowment spending policies and their role in balancing near-term spending needs and intergenerational equity.
Yes. A rigorous operational due diligence (ODD) review is a core piece of the investment manager underwriting process that allows limited partners to make informed investment decisions. Recent banking sector events, including yesterday’s collapse of First Republic Bank, highlight the need for a constantly evolving ODD framework capable of identifying and addressing both ongoing and new risks that managers may encounter.
Costs are an important consideration when devising an overall wealth management strategy. Each family’s wealth management cost formula is different. Various tools and insights are available to help them make informed decisions about how to meet their unique service requirements and investment goals at a reasonable cost.
Our 2022 Endowment Radar Study reflects the important role of the endowment in the dynamic private college and university business model. The endowment played a relatively smaller role in supporting growing operating budgets and financial aid commitments compared to 2021.
A growing number of institutions and families are choosing to spend down assets over a limited time, rather than investing in perpetuity. There are valid arguments for—and against—using a spend-down approach to achieve philanthropic and investment goals. This paper provides historical context for spend-down funds, considers nuances for achieving good governance, and suggests an approach for dynamic asset allocation strategy, with case studies as illustrations.