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MPI’s endowment research shows highest performers in 2016

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Research and analytics firm MPI has published an assessment of Ivy League endowments’ 2016 FY Performance. The firm writes that asset allocation remains the largest determining factor in endowment performance.

“Commodities and Emerging Markets, each of which suffered respective losses due to continued declining oil prices or political turmoil, were a significant drag on Ivy League funds’ returns.  Despite FY 2015’s stellar performance by Venture Capital and marginally positive returns by Hedge Funds, both asset classes posted negative returns in FY 2016. Real Estate, US Equities and Bonds were the highest performers in FY 2016.
“Yale continued its strong performance. Posting a 3.4 per cent FY 2016 return, Yale beat Princeton, the only other Ivy League endowment with a positive return, by 2.6 per cent. By contrast, Yale arch-rival Harvard’s near USD2 billion loss elicited official calls in the press to re-evaluate the University’s entire investment strategy.
“Yale’s substantial outperformance is attributable to four themes including over-weighting private investments (Venture Capital, Hedge Funds, Private Equity and Real Estate), avoidance of Commodities and Emerging Markets and a focus on asset allocation implemented through a strong emphasis on fund manager selection. These themes reflect the ‘Yale Model’ that encapsulates the investment philosophy of Yale’s long-time chief investment officer David Swenson.”
In conclusion, MPI writes that the sources of investment return of university endowments remain opaque.

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