The Endowment Model Revisited

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The investment committees of endowments and foundations have long relied on portfolios of marketable stocks and bonds to deliver operating payouts while preserving purchasing power. That model has been increasingly threatened by lower forecasted returns across both stocks and bonds, forcing a difficult decision on investment committees: decrease payouts, or embrace illiquidity in the hunt for returns. In this letter, we examine the success of endowments and foundations who have increased their allocation to private asset classes.

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