Developed by a select group of university investors and later adopted by many nonprofits, the “endowment model” was often considered the gold standard for maximizing long-term returns. In recent years, many adherents have underperformed compared to simpler, lower-cost portfolios of index-like public bond and equity allocations.

We don’t believe the endowment model is broken. In our view, it excels at the “art” of asset allocation: emphasizing diversifying alternative investments, seeking alpha-generative skill, and leveraging a long investment horizon to capture risk and illiquidity premia. However, it has not placed as much emphasis on adopting the “science” of portfolio construction: technological and analytical tools that help detect and adapt to changes in market structure.

In this paper, we examine the challenges facing the endowment model and propose a more dynamic, holistic and scientific approach to modernize it.

You can now read the full whitepaper at the link below