Monday, February 9, 2015
Asset allocation of endowments
The chart sums up latest disclosures of investment holdings by endowments and Corporate Pension Funds.
The first observable fact: low level of lack of fixed income in endowment portfolios, 9.00%.
Second, 53.7% of endowment holdings are in "alternative" classes: hedge funds, private equity, and real estate.
Equities are only 27.00% of endowment portfolios.
Alternatives investments, offering lower liquidity and lower volatility, are not so "alternative" for endowments, who are assuming that returns will be better from hedge funds, private equity, and real estate.
As a result, almost 99% of endowments expect better than 7% annualized returns over the long run, while only 66% of pension funds expect the same.
Source: Market Insights. 1Q 2015. JP Morgan Asset Management.