Endowments and Foundations Still Hurt
According to a recent survey, endowments and foundations are still feeling the ill effects of the 2008 and 2009.
Industry group, the National Association of College and University Business Officers (NACUBO) and research house the Commonfund Institute released a preliminary study on investment and performance trends gathered from 284 U.S. colleges and universities. The study reported trends from July 2010 to June 2011.
“What stands out in these preliminary figures is the fact that, despite the positive returns of this year and last, endowments still have not completely recovered from the damage inflicted by the market declines that accompanied the 2008 and 2009 credit crisis,” said Commonfund Institute Executive Director John Griswold.
“The average endowment is still at only 86% of its value in 2007. It will take several more years of positive returns for endowments to recover fully from the crisis.”
Institutions in the study range from those with endowment assets under $25 million to those with assets in excess of $1 billion. In the past, larger endowments have tended to significantly outperform smaller ones. This year’s sample, however, reveals a very tight spread, as institutions with assets over $1 billion returned 20.2% on average, while those with assets below $25 million reported an average return of 19.1%.
Liquidity perhaps was missing in 2008 and 2009.
“Endowments certainly experienced liquidity issues in 2009, but these appear to have lessened in 2010, as the effects of the credit freeze largely began to fade. The share of endowments that changed their asset allocation due to liquidity concerns fell from 34% in 2009 to 23% in 2010. More tellingly, in 2009 we reported that 24% of respondents had a liquidity squeeze in 2009, improved to 10% in 2010.”
With Joel Kim, Head of International Fixed Income and CEO Asia ex-Japan, Dimensional Fund Advisors
Participants are looking to connect with alternative liquidity providers.
Traders need to consider the heterogeneity, diversity, and incongruity of Asian equity markets.
Liquidity challenges in bond markets in the pandemic forced the buy side to find new trading partners.
With Adam Conn, Head of Trading, Baillie Gifford