The “endowment model” investment strategy has gained popularity following its successful implementation by some of the largest university endowments, whose effective use of the model has inspired small and mid-sized endowments to attempt to replicate it. However they have not necessarily been as successful.
The current environment sheds significant light on the fact that this model impacts smaller universities much more than the larger universities that trail-blazed the approach. They may not have the same time horizon, expertise, resources or access to investment managers that have allowed the largest endowments to be successful.
Before considering whether your investment program is truly capable of successfully implementing this model, read the key tenets and case study examples in this paper. You'll gain a better understanding of how the endowment model is most effectively executed.
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Investing involves risk including possible loss of principal. Diversification may not protect against market risk. There can be no guarantee objectives will be achieved nor that risk can be managed successfully.
This material represents an assessment of the market environment at a specific point in time and is not intended to be a forecast of future events, or a guarantee of future results. This information should not be relied upon by the reader as research or investment advice and is intended for educational purposes only.