Preserving Purchasing Power in a Difficult Environment
This short paper reviews asset class valuations and offers summary asset allocation recommendations.
Investment Planning
Price Competition in Higher Education
The reasons most commonly cited for the seemingly inexorable slide toward the financial abyss are the relentless competition for high position in college rankings such as those invented by U.S. News & World Report; competition from taxpayer-subsidized public universities; and the inclination of even relatively affluent parents to bargain for more financial aid. Most at…
The Growing Importance of Endowment
Our data suggest that colleges with proportionally more endowment enjoy stronger pricing power and greater capacity to bridge the widening gap between operating revenues and expenditures. At the same time, the abrupt end to the sustained 1990s bull market increases the prospect that volatility in investment returns may put endowment support of operations at greater…
Portfolio Risk Measurement – Shortfall and Relative Risk Analysis
A discussion of how to think about and measure risk at two key stages in the investment management process: when constructing a coherent long-term asset allocation policy, and when implementing and evaluating that policy once developed.
Some Questions
This short paper addresses a range of investment planning topics including deflation hedging, valuation models, and consolidation in the investment management industry.
Behavioral Finance
An evaluation of common mistakes made by investment committees including overrating the importance of recent information, oversimplification of complex issues, extrapolation of past results into the future, and diffusion of responsibility.
Diversification: A Warning Note
This paper advises investors to carefully examine the risk, return, and correlation characteristics of their portfolios against those on which policy allocations are based; and rebalance from equities to bonds, from growth to value, and from financial to real assets.
Permanent Capital: Lasting Support for Endowment Institutions
A working paper that proposes an economic—as distinct from accounting—definition of endowment, along with discussion of the strategic importance of endowment.
Endowment Risk, Return and Spending
An in-depth look at endowment risk, return, and spending.