“The facts don’t speak for themselves; someone has to speak for the facts.”
Milton Friedman, economist
In recent months, a litany of editorials and academic studies have focused on the “state of the nation” for foundation and endowment investments, and more specifically, the role of alternative investments in these portfolios. To generalize broadly, the two industry approaches to investing the endowments of tax-exempt organizations are the traditional model (“60/40”) and the endowment model (“Yale University”). In contrast to the traditional approach, the endowment model espouses the utilization of more illiquid assets and investment programs such as hedge funds, private equity, and private natural resources. These programs are typically funded from the historical allocations to stocks and bonds.
In this piece, we review the data, and impartially, speak to the facts so that your organization is equipped to make an informed decision about adding alternatives to your investment portfolio.