Small and Mid-sized Foundations Question Endowment Model

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Mark Melin
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Some small and mid-sized endowments and foundations are questioning the value of an “Endowment Model” portfolio that includes uncorrelated alternatives instead of a blind 60/40 portfolio of stocks and bonds allocation.  The model has been criticized for being too complex and staff heavy to manage. However, a new study from institutional consulting firm NEPC shows the majority have not forgotten the lessons of 2008. While a traditional correlation to stocks that ignores hedging during potential periods of economic uncertainty, a strategy that has worked well only after 2008, might not work well in the future, the report says. Endowment Model:…

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Mark Melin is an alternative investment practitioner whose specialty is recognizing the impact of beta market environment on a technical trading strategy. A portfolio and industry consultant, wrote or edited three books including High Performance Managed Futures (Wiley 2010) and The Chicago Board of Trade’s Handbook of Futures and Options (McGraw-Hill 2008) and taught a course at Northwestern University's executive education program.