Premium
Investment beliefs of endowments
Author(s) -
Ang Andrew,
Ayala Andrés,
Goetzmann William N.
Publication year - 2018
Publication title -
european financial management
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.311
H-Index - 64
eISSN - 1468-036X
pISSN - 1354-7798
DOI - 10.1111/eufm.12149
Subject(s) - endowment , equity (law) , hedge fund , portfolio , private equity , economics , bond , alternative investment , financial economics , private equity fund , asset allocation , alternative asset , hedge , monetary economics , finance , ecology , philosophy , epistemology , political science , market liquidity , law , biology
United States university and college endowments now hold close to one‐third of their portfolios in private equity and hedge funds. We estimate the implied beliefs of endowments on these alternative assets’ returns relative to equities and bonds. At the end of 2012, the typical endowment believes that its private equity investments will outperform a portfolio of conventional assets by 3.9% per year, and hedge funds will outperform by 0.7% per year. Taking into account the implied equity exposures in alternative asset positions, the effective equity holding of endowments is approximately 60%.