Thursday, 31 July 2014
Last updated 16 hours ago
Nov 7 2013 | 11:26am ET
U.S. college and university endowments, among the earliest and largest investors in alternative investments, are taking a step back from the space.
A survey of 461 endowments shows an average allocation to alternatives of 47%, down sharply from the 54% found last year, the National Association of College and University Business Officers and the Commonfund Institute said. The two suggested that the decline "may indicate a pause in the long-term trend of growth" in alternative investments, but Commonfund's Bill Jarvis warned against reading too much into it.
"The public markets have been supported since 2009 by central bank action," he told The Wall Street Journal. "In that environment, other portfolios are, relatively speaking, going to be less favored."
The report backs up Jarvis' suggestion, noting that endowments' average domestic equities allocation jumped from 15% to 20%, and international equities from 16% to 19%. And it's paying off: domestic stocks provided an average 20.5% gain for endowments, compared to just 8.6% for alternative strategies. Among the latter, distressed debt did best at 13.2%, followed by private equity at 11.3%.
Jarvis said the decline—typified in some ways by Yale University's decision to cut back on it private-equity investments—is not a big deal.
"People wrote about Yale decreasing its private equity allocation from 34% to 31% like it was an earthquake," he said. "To me, that's a tweak."
Jul 8 2014 | 10:48am ET
The surge in derivatives regulation is among the most complex challenges facing the financial services industry today. Northern Trust’s Joshua Satten recently spoke with FINalternatives to share insights into the challenges presented by new regulation and explore how the industry is responding. Read more…