NEPC’s “Mega Endowment FY 2022 Returns” report was featured in a recent FIN News article to discuss our findings. View the article on FIN News’ site here.
Mega endowments continue to outpace their smaller peers despite the challenging market environment due in part to greater allocations to diversifying alternative asset classes, according to a recent report.
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There was a case to be made for maintaining allocations to public equities and fixed-income securities coming out of COVID-19, which challenged the merits of diversification, according to Senior Consultant Colin Hatton.
“Higher education endowments have been reducing exposure to diversifying alternatives over the past several years. However, in 2022, we saw that the larger endowments that maintained large allocations to real assets, private equity and hedge funds were rewarded due to macroeconomic factors, mainly high-interest rates and inflation,” Hatton said, in e-mailed commentary.
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“As we look ahead, we expect that real assets and active hedge fund strategies will continue to play an important role in client portfolios, but the near-term differential between public and private market performance should narrow as we head into 2023 and beyond,” Hatton said.