NEPC Partner and Practice Group Leader, Kristin Reynolds, has been featured in an article in Pensions & Investments for her commentary on exceptional endowment returns. View excerpts below or read the full article on the Pensions & Investments site here.
College and university endowments boasting higher allocations to domestic equities and hedge funds chalked up positive returns for the second fiscal year in a row, even stronger than the previous year.
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Hedge funds may have made the difference for some endowments when comparing fiscal year 2024 to fiscal year 2023, said Kristin Reynolds, partner and practice group director at NEPC.
“There’s a whole group in the middle that I think are interesting, that have diversified strategies that are thinking about the world in a more conventional manner,” said Reynolds. “They had a high year for fiscal year 2024 if they had public equity, but also diversifiers helped in 2024. When I say diversifiers, I mean what other people might call hedge funds or output-oriented strategies. With the volatility in the markets and China having a rally, strategies that were more globally oriented but also less tied to public markets did well.”
Reynolds said those endowments may have struggled more in fiscal year 2023.
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“Private equity has been the main driver of returns for the long-term period,” said NEPC’s Reynolds. “You can imagine that the questions are around (whether) private equity drive returns in the future, and so there are a lot of discussions about private equity valuations largely coupled with public equity valuations.”
Reynolds said that while in the last two years private equity returns have been lower, she still thinks there are strong returns ahead in the long term, especially in areas like middle-market buyout funds, the kinds of areas where operators are strongly involved.
Click here to read the full article on the Pensions & Investments site.