Mercer | Top 10 Investment Ideas for Endowments and Foundations

Endowment and foundation (E&F) portfolios continue to benefit from strong equity markets, with overseas investments contributing at a greater rate than in most periods since the Great Financial Crisis. Loft from equities can provide false comfort, however, as changing market dynamics make the persistence of this bull run more fragile. At the same time, greater reliance on endowments makes institutions more vulnerable to adverse events. Staff and committees should apply a strategic perspective to processes and other operational considerations to ensure they provide the checks and balances necessary to support successful investment execution.

Be prepared to be opportunistic
 

Embrace the idea of “doing nothing” as being strategic

Upgrade the governance batphone
 

Undertake a disciplined resource-budgeting process
 

Consider the absolute dollars provided by your spending policy in addition to the spending rate
 

 
Identify secondary sources of liquidity
 

Revisit ESG investing as opportunities become more attractive as standalone investments
 

Reframe the active versus passive debate
 

Assess vulnerability to lawsuits against university-sponsored 403(b) plans 
 

Be aware of tax changes — and changing perceptions — for colleges and universities