The Endowment Model

October 22, 2013

Hedge Fund Landscape

The first hedge fund emerged in 1949 when sociologist Alfred Winslow Jones and his four friends formed an investment partnership. The first reference to a hedge fund appeared in a 1966 Fortune article by Carol Loomis. Ms. Loomis wrote the story of Alfred Jones in The Jones Nobody Keeps Up With, little did she know… Continue reading

Alternative Investments, Asset Allocation, Hedge Funds, Portfolio Management, Risk Management, The Endowment Model

October 15, 2013

Endowment Spending and Purchasing Power Preservation (IV): Real Estate

Potential Benefits of Real Estate Investments Similar to the return patterns of other real assets, real estate returns also have low correlations with traditional investment vehicles, which adds a diversification benefit. Secondly, as real estate investment returns are directly linked to the rents, its income tends to increase faster in inflationary environments, allowing investors to… Continue reading

Alternative Investments, Portfolio Management, Real Assets, Real Estate, Risk Management, The Endowment Model

October 13, 2013

Endowment Spending and Purchasing Power Preservation (I): Commodities

Endowment Spending Policy One of the most difficult challenges that any investment committee member of endowments and foundations face is choosing a spending policy that will best balance two competing goals: maintaining the level of current spending, and growing or preserving the purchasing power of the endowment assets over time even after making charitable distributions.… Continue reading

Alternative Investments, Commodities, Portfolio Management, Real Assets, Risk Management, The Endowment Model

October 8, 2013

Balancing Risk and Reward: Asset Allocation

The Importance Asset Allocation Many portfolio managers believe that asset allocation is one of the most important decisions that investors make: From a portfolio design standpoint, portfolio theory asserts that in any given period, some investment styles will be outperformers and some will be underperformers, and market goes through cycles. The addition of investment styles… Continue reading

Asset Allocation, Financial Modeling, Portfolio Management, Risk Management, The Endowment Model

October 6, 2013

From Modern Portfolio Theory to Pioneering Portfolio Management: The Endowment Model

Implications of Modern Portfolio Theory Traditional and widely used institutional policy portfolios commonly consisted of a majority of U.S. equities and a reciprocal proportion of U.S. bonds, e.g., 60% stock/40% bond portfolio. The modern portfolio theory (MPT) was developed in the 1950s through the 1970s, particularly, Markowitz 1952, Sharpe 1963, 1964, Ross 1976. Despite all… Continue reading

Alternative Investments, Asset Allocation, Financial Modeling, Portfolio Management, The Endowment Model

September 1, 2013

Approaches to Tail Risk Hedging in The Endowment Model 捐赠基金投资模型中的左尾风险对冲

In the Foreword of David Swensen (2009), Charles Ellis commented that Yale was good at playing defense, because the endowment was built to withstand the inevitable storms that face capital markets. This resiliency was recently put to a severe test, as the Yale endowment lost 25% of its value in the year ending June 2009.… Continue reading

Alternative Investments, Asset Allocation, Portfolio Management, Risk Management, The Endowment Model

January 23, 2013

Alternative Investments in a Portfolio 另类资产在资产配置中的作用

Traditional asset classes such as stocks, bonds, and cash tend to be highly correlated with each other during the down markets. The long-only investments may not meet the changing needs of investors, as a combination of equities and bonds do not provide enough diversification. In a traditional portfolio of stocks and bonds, the major sources… Continue reading

Alternative Investments, Asset Allocation, Financial Modeling, Portfolio Management, Risk Management, The Endowment Model

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