New data shows that thanks to alternative investments, endowments did relatively well in 2009
| Feb 4th, 2010 | Filed under: Institutional Investing, Today's Post | By: Alpha Male |
American university endowments have long been held up as models of a new form of investing. The so-called “Yale model” is standard fare at industry conferences and the recent travails faced by Harvard’s endowment have scratched a Schadenfreude itch felt by many commentators. Way back in January 2007, The Economist raised the possibility that these beacons of alternative investing may someday have to pay the piper (see related post)…
“Simply putting 20% into hedge funds is no longer enough. The big test of their prowess will come when lax credit conditions tighten. John Griswold of Commonfund thinks that some investment committees, stuffed with alumni, may be starting to lose track of the risks their endowments are taking.”
Investment committees may indeed have been aware of the risks they were taking with alternative investments. As a result, they under-weighted the traditional risks of long-only equity (known by previous, more cautious generations as “playing the market”) and instead invested in alternative strategies. More…
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