15 Pages Posted: 8 Jun 2020 Last revised: 26 Jun 2020
Date Written: June 25, 2020
Endowment funds in the U.S., large and small, significantly underperform passive investment. Moreover, an analysis of the performance of 43 of the largest individual endowments over the 11 years ended June 30, 2019, reveals that none outperformed with statistical significance, while one in four underperformed with statistical significance. Alternative asset classes have failed to deliver putative diversification benefits and have had an adverse effect on endowment performance. Given prevailing diversification patterns and costs of 1 to 2% of assets, it is likely that the great majority of endowment funds will continue to underperform in the years ahead.
Keywords: Wealth Management, Endowment Funds, Pension Funds, Alternative Investments, Portfolio Choice
JEL Classification: G11
Suggested Citation: Suggested Citation