NEPC’s Kristin Reynolds was quoted in a recent Pensions & Investments article which focuses on why colleges might need to revisit risk and returns. View the article on Pensions & Investments’ site here.
A continuing “enrollment cliff” combined with rising interest rates and other worries are making risk a larger issue for college endowment officials, advisers say.
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The use of outsourced CIO providers, a trend that saw rapid growth a decade ago, is still seeing growth, said Kristin Reynolds, Boston-based partner of endowment and foundations at investment consulting firm NEPC LLC, with $110 billion in endowment and foundation assets. The pressure on advisers to deliver performance, or be replaced, has also grown, she said.
While her firm is seeing a shift in what colleges spend money on, their endowments are still cash positive and not changing asset allocations. There is more talk about downside risk, but not much change in endowment’s risk profiles so far, Ms. Reynolds said.
A more immediate concern for endowment clients are private equity valuations, leading them to differentiate by vintage years and push for lower fees. “We have seen managers being more creative with their fees” to satisfy client demand, Ms. Reynolds said.
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When it comes to responsible investing or environmental, social and governance considerations, “in the endowment space the news is still somewhat the same,” with investors asking for proactive solutions rather than bold moves such as divestment or exclusion, Ms. Reynolds said, and more interest in addressing social issues like diversity, equity and inclusion than tackling climate change, which can be trickier to measure and target.
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