Asset Allocation

Meeting the
Challenge of CPI +5%

Posted by Commonfund on Mar 21, 2017

Topic: Asset Allocation Equities Industry Knowledge Investment Strategy Private Capital

Despite the fact that the economy is expanding and the S&P 500 has been up for eight straight years, many nonprofit investors haven't been feeling the benefits as the main tenets of the endowment model of investing have been hampered by the market environment. In this Commonfund Forum 2017 session, Commonfund President & CEO, Catherine Keating, provides insight into the challenges of meeting CPI + 5% for fiduciaries. To obtain a copy of the slides shown in this presentation, please contact your Commonfund relationship officer.

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What do the Cable Television and Hedge Fund Industries Have in Common?

Posted by David Scarozza on Feb 28, 2017

Topic: Asset Allocation Hedge Funds Investment Strategy Risk Management

These industries may seem an odd pairing, but both are in the midst of a disruption-led, industry-wide rationalization process. The two industries share in common a historically evolved “bundling” price structure, heavily favoring the sellers, that is breaking down due to the recent proliferation of distribution alternatives. This is giving consumers the option to be far more choosey about the prices they are willing to pay for varying levels of content.

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Five Takeaways from Treasury Symposium 2017

Posted by Jon Speare on Feb 23, 2017

Topic: Asset Allocation Governance and Policy Industry Knowledge Operating Assets

Treasury Symposium 2017 was held in New Orleans earlier this month. 285 senior financial officers from over 100 large universities participated in the strategic discussions. Once again, the takeaways from the three-day Symposium were thought-provoking as well as cautionary for the higher education industry.

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Constraints Faced by Healthcare Endowments

Posted by Bill Jarvis, Executive Director, Commonfund Institute on Feb 17, 2017

Topic: Asset Allocation Industry Knowledge

As a result of the evolving landscape of the healthcare industry, organizations are increasingly being shaped by pressures affecting both the revenue and expense sides of the income statement.

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Private Credit Opportunities

Posted by James Meisner | Vincent Kravec, CFA, Associate Director, Fixed Income Strategies on Feb 8, 2017

Topic: Asset Allocation Fixed Income Investment Strategy

Much has been made of the challenges endowment, foundation and nonprofit investors face in achieving a CPI+ five percent return target. One way to improve the probability of attaining this goal is to take advantage of the so-called “liquidity premium.”

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2016 NACUBO-Commonfund Study of Endowments Results Released

Posted by Commonfund Institute on Jan 31, 2017

Topic: Asset Allocation Governance and Policy Industry Knowledge

Data gathered from 805 U.S. colleges and universities for the 2016 NACUBO-Commonfund Study of Endowments® (NCSE) show that participating institutions’ endowments returned an average of -1.9 percent (net of fees) for the 2016 fiscal year (July 1, 2015 – June 30, 2016). This year’s negative return, following the low 2.4 percent return reported for FY2015, contributed to a decline in long-term 10-year average annual returns to 5.0 percent from last year’s 6.3 percent.

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Active vs. passive: There is no debate

Posted by Mark J.P. Anson, Chief Investment Officer, Commonfund on Jan 31, 2017

Topic: Asset Allocation Equities Fixed Income Investment Strategy Risk Management

Like King Kong vs. Godzilla, the investment debate of active vs. passive continues. I really enjoyed those cheesy old movies from Japan that pitted the two big monsters of science fiction. But as I recall, there was never a clear winner: Sometimes King Kong won the battle, sometimes Godzilla.

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Real Estate Credit Environment: Risk Off – Risk On

Posted by Paul Von Steenburg, Managing Director, Commonfund on Jan 9, 2017

Topic: Asset Allocation Real Estate Risk Management

Earlier last year real estate markets received a scare as CMBS spreads widened, particularly in lower-rated and more junior tranches. Additionally, one of the most respected U.S. real estate research firms predicted outright price declines for the asset class in 2016. While credit conditions have tightened, particularly for construction financing, wider scale credit concerns have largely dissipated and CMBS spreads have tightened.

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Year-End Letter & 2017 Investment Outlook

Posted by Catherine Keating, President and Chief Executive Officer, Commonfund on Jan 3, 2017

Topic: Asset Allocation Investment Strategy

We would like to wish you the very best in the New Year, and we are pleased to share with you our year-end letter and comprehensive investment outlook for 2017. For a more detailed look at our expectations and portfolio positioning going forward, download our Year-End Letter and 2017 Investment Outlook | Thriving in a Diverging World.

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A False Sense of Diversification?

Posted by David Scarozza on Nov 29, 2016

Topic: Asset Allocation Equities Investment Strategy

As we have undergone the process of re-underwriting all of Commonfund’s equity managers and funds over the last 6 months, we have tackled anew the age old question of how many funds does one multi-manager equity portfolio require to offer appropriate levels of diversification? While there is no single universally appropriate answer, our research has indicated that, upon closer inspection, many multi-manager equity portfolios may not be quite as diversified as intended from a potential excess return perspective.

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Quant Corner: Understanding Active Risk and Tracking Error

Posted by Jess Gaspar, PhD, Managing Director, Head of Quantitative Research on Nov 7, 2016

Topic: Asset Allocation Investment Strategy Quant Strategies Risk Management

Investors frequently focus on the total return they experience in their portfolios. In periods when absolute returns are high, they feel good; in periods when absolute returns are low, they feel bad. Yet good performance and bad performance should not be evaluated in a vacuum, they should be evaluated relative to the risks undertaken in their portfolios.

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2015 CSHO Study of Healthcare Organizations Released

Posted by Commonfund Institute on Nov 1, 2016

Topic: Asset Allocation Governance and Policy Industry Knowledge

Data gathered in the 2014-2015 Commonfund Benchmarks Study of Healthcare Organizations (CSHO) reveals investment challenges facing hospitals. Participants report 4.4 percent return for FY 2014 but -1.6 percent for FY2015.

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Hedge Fund Strategies 2.0

Posted by Caroline Greer | Kristofer Kwait, Managing Director, Head of Hedge Fund Strategies on Oct 10, 2016

Topic: Asset Allocation Hedge Funds Investment Strategy

The old mantra of using hedge funds for downside protection and upside participation hasn't worked. During this webcast, we examine the why and the how of hedge funds - why invest in them and how to invest in them effectively within institutional portfolios.

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2015 CCSF Study of Foundations Released

Posted by Commonfund Institute on Aug 23, 2016

Topic: Asset Allocation Governance and Policy Industry Knowledge

Data gathered in the 2015 Council on Foundations - Commonfund Study of Investment of Endowments for Private and Community Foundations (CCSF) shows Foundations' spending in support of mission holds steady, despite second year of declining investment returns.

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Equity Performance Review: Fiscal Year 2016

Posted by Keith Luke | Mark J.P. Anson, Chief Investment Officer, Commonfund | Kristofer Kwait, Managing Director, Head of Hedge Fund Strategies on Jul 21, 2016

Topic: Asset Allocation Equities Investment Strategy

Our latest webcast reviews equity performance for fiscal year 2016 and the positioning for the portfolio going forward.

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Commonfund Study of Responsible Investing: Foundations Survey

Posted by Commonfund Institute on Jul 14, 2016

Topic: Asset Allocation Investment Strategy Responsible Investing

Commonfund Institute and The Council on Foundations survey builds upon the 2014 Council on Foundations-Commonfund Study of Investment of Endowments for Private and Community Foundations® (CCSF) by delving in to responsible investing practices, policies and portfolio strategies.

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Integration of ESG Factors in Practical Steps

Posted by Bill Jarvis, Executive Director, Commonfund Institute on Jul 1, 2016

Topic: Asset Allocation Governance and Policy Investment Strategy Responsible Investing

In the current climate of slow global economic growth and resource constraints at many institutions, integration of ESG considerations in an organization’s investment portfolio may be perceived as a luxury or an unacceptable distraction. ESG implementation does not, however, need to be an all or-nothing decision. A sliding scale of engagement is available for institutions that decide to explore ESG...

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Commonfund Roundup
06-29-16

Posted by Commonfund on Jun 29, 2016

Topic: Asset Allocation Governance and Policy Industry Knowledge Investment Strategy Market Commentary Responsible Investing Risk Management

In this month’s Commonfund Roundup, active management and risk are leading topics. Featured articles include: an interview in Institutional Investor with CEO, Catherine Keating, where she discusses the active-versus-passive debate and more; and “Active Management Fatigue and What to Do About it,” co-authored by Kristofer Kwait, Head of Investments; Jess Gaspar, Head of Asset Allocation and Research; and John Delano, Head of Analytics. Also included, the new white paper, "Striking the Balance: A Fiduciary Approach to Risk and the Investment Policy"; the latest weekly economic podcasts and more.

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Bridging the Gap: Carbon and Fiduciary Responsibility

Posted by Alex Gurvich on Jun 20, 2016

Topic: Asset Allocation Governance and Policy Responsible Investing

Most institutional investor discussions and actions regarding global warming have been at two ends of the spectrum: either divest from fossil fuels entirely or remain fully invested. A better approach would be to change the conversation from a tug of war over a binary decision, between investment considerations and environmental appeals, to a more balanced discussion centered on common objectives.

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Active Management Fatigue and What to Do About It

Posted by Kristofer Kwait, Managing Director, Head of Hedge Fund Strategies | John Delano, Director, Hedge Fund Strategies Group, Commonfund | Jess Gaspar, PhD, Managing Director, Head of Quantitative Research on Jun 14, 2016

Topic: Asset Allocation Investment Strategy

Active management has struggled for several years, raising questions about whether active management can ever outperform again. Traditional active manager style tilts, like value and size, have detracted from performance in recent periods. Over the long run, these tilts tend to mean revert around positive trends, creating reasons to be optimistic about active management’s prospects. On the other hand, only 30 percent of managers truly deliver positive alpha after controlling for typical active management style tilts.

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Responsible Investing for Foundations

Posted by Commonfund Institute on Jun 13, 2016

Topic: Asset Allocation Investment Strategy Responsible Investing

Commonfund and Council on Foundations are thrilled to announce the release of the 2016 Council on Foundations – Commonfund Study of Responsible Investing. It is the largest and most detailed survey to date on practices, policies and attitudes relating to socially-responsible investing (SRI), environmental, social and governance integration (ESG) and impact or mission-related investing (MRI) among U.S. private and public founda­tions. The Study encompasses both the policies of foundations that have adopted any of the responsible investing practices listed and the attitudes toward responsible investing of those that have not.

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Catherine Keating speaks with Institutional Investor

Posted by Institutional Investor on Jun 10, 2016

Topic: Asset Allocation Investment Strategy Market Commentary

Catherine Keating sits down with Institutional Investor to discuss the investment edge for nonprofits in a low-interest-rate environment and the active-versus-passive debate.

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What’s Next for Cash Investors?

Posted by Barbara Novick | Richard Aks | Michael Strauss, Chief Investment Strategist and Chief Economist | Jon Speare on Jun 7, 2016

Topic: Asset Allocation Investment Strategy Market Commentary Operating Assets

In the static low-rate environment of recent years, it seemed as though there was no “what’s next” for cash. Today, that has changed, as there are major forces reshaping the regulatory and interest rate regimes.

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Striking the Balance: A Fiduciary Approach to Risk and Investment Policy

Posted by Commonfund Institute on May 31, 2016

Topic: Asset Allocation Governance and Policy Investment Strategy Risk Management

In formulating an investment policy, fiduciaries frequently treat risk as an output of portfolio construction and asset allocation processes, giving priority to return objectives. Fiduciaries would do better to acknowledge risk as a primary input which guides and constrains those charged with institutional governance and investment policy formulation. Download this paper to help determine practical methods to assign risk when formulating an investment policy for your institution.

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Commonfund Roundup
05-31-16

Posted by Commonfund on May 31, 2016

Topic: Asset Allocation Governance and Policy Industry Knowledge Risk Management

This month's Commonfund Roundup features a webcast of Catherine Keating on the panel, "Thematic Investing and Portfolio Strategies: Betting on the Megatrends", at Milken Institute's Global Conference; Mark Anson and Ryan Driscoll's article, "Unhedged Commentary: The $3 Trillion Question," published in Institutional Investor’s Alpha; Commonfund Forum Spotlights, "The Big Picture: Integrating Investments, Finance and Development" and "Ideas for Next Gen Energy Investing"; along with the latest economic pod casts and more.

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Ideas for Next Gen Energy Investing

Posted by Ethan Levine | Stuart Ames, Managing Director, Commonfund Strategic Solutions | Phil Deutch | Robert Armstrong on May 17, 2016

Topic: Asset Allocation Industry Knowledge Investment Strategy Responsible Investing

Advances in alternative energy technologies promise to reduce the world’s dependence on fossil fuels. Largely, however, they remain just that—a promise. So, where are the opportunities to invest in the evolving energy environment? At Commonfund Forum 2016, a panel discussion took on this question.

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Multi-Asset Quarterly Investment Performance Review & Outlook | Q1 2016

Posted by Mark J.P. Anson, Chief Investment Officer, Commonfund | Steve Snyder, Managing Director, Head of Multi-Asset Program, Commonfund | Jeff Long | Alec Rapaport, Managing Director, Head of Fixed Income Strategies | Michael Strauss, Chief Investment Strategist and Chief Economist on May 4, 2016

Topic: Asset Allocation Equities Fixed Income Market Commentary

Multi-Asset Quarterly Investment Performance Review and Outlook

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Commonfund Roundup
05-02-16

Posted by Commonfund on May 2, 2016

Topic: Asset Allocation Governance and Policy Industry Knowledge Risk Management

This month's Commonfund Roundup features our latest Partner Page for OHSU Foundation; Commonfund Forum Spotlight, Emerging Markets: Balancing Risk and Reward; Mark Anson's latest article, "Asset Allocation with Private Equity," published in the Journal of Investment Consulting; along with the latest economic pod casts and more.

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Asset Allocation with Private Equity

Posted by Commonfund on May 2, 2016

Topic: Asset Allocation Investment Strategy Private Capital

Private assets such as private equity and venture capital have long been a thorn in the side of asset allocators and chief investment officers. Their lack of liquidity makes it hard to model their return streams as an input to an asset allocation model, risk budget, or optimization function. Typically, asset allocators make assumptions based more on intuition and expectation than fact.

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Emerging Markets:
Balancing Risk and Reward

Posted by Dana Moreau, Chief Risk Officer, Commonfund | Geoff Colvin, Senior Editor-at-Large, Fortune Magazine | Cate Ambrose, President and Executive Director, Latin American Private Equity and Venture Capital Association | Kun Deng, Managing Director, Lazard Asset Management | Jui Tan, General Partner, BlueRun Ventures China on Apr 13, 2016

Topic: Asset Allocation Industry Knowledge Investment Strategy Risk Management

Investors poured $2 trillion into emerging economies between 2009 and 2014. Then prices for a basket of commodities fell—dragging crude oil down to levels not seen in a decade and dashing investors’ hopes at the same time. What now?

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Investment Management
Principle 3: Asset Allocation

Posted by Commonfund Institute on Apr 7, 2016

Topic: Asset Allocation Governance and Policy Industry Knowledge Investment Strategy

In this installation of Commonfund's 7-part series of Principles of Investment Management, we will review Principle #3: Asset Allocation. Arguably one of the most important investment-related decisions, asset allocation will largely determine the level of risk-adjusted return you are seeking. A key responsibility of the governing board, your strategic asset allocation policy will set the course for investing the fund for many years to come. But determining an optimal asset allocation for your institution’s portfolio involves more than numbers.

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Commonfund Roundup
03-29-16

Posted by Commonfund on Mar 29, 2016

Topic: Asset Allocation Governance and Policy Industry Knowledge Risk Management

This month's Commonfund Roundup includes the results of the Commonfund Investor Outlook Survey™, Commonfund Forum Spotlights, Sal Khan, Education Reimagined webcast, along with the article, Rethinking Risk and Diversification; the latest economic pod cast and more.

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Rethinking Risk and Diversification

Posted by Mark J.P. Anson, Chief Investment Officer, Commonfund | Catherine Keating, President and Chief Executive Officer, Commonfund | Bruce Zimmerman, CEO and CIO, University of Texas Investment Management Company and Commonfund Trustee on Mar 23, 2016

Topic: Asset Allocation Industry Knowledge Investment Strategy Risk Management

Asset allocation is still the foundation on which better risk-adjusted returns are built. But asset allocation has changed, along with all the associated tools for pursuing return and managing risk. Have you kept up?

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Xchange Webcast: Risk, Return and Volatility

Posted by Mark J.P. Anson, Chief Investment Officer, Commonfund | Brett Lane, Managing Director on Mar 22, 2016

Topic: Asset Allocation Equities Fixed Income Investment Strategy Market Commentary Risk Management

Xchange Webcast: Risk, Return and Volatility with Chief Investment Officer Mark Anson

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Multi-Asset Quarterly Investment Performance Review & Outlook | Q4 2015

Posted by Mark J.P. Anson, Chief Investment Officer, Commonfund | Steve Snyder, Managing Director, Head of Multi-Asset Program, Commonfund | Nick De Monico, Former interim CIO, Commonfund | Jeff Long | Alec Rapaport, Managing Director, Head of Fixed Income Strategies | Michael Strauss, Chief Investment Strategist and Chief Economist on Jan 25, 2016

Topic: Asset Allocation Equities Fixed Income Market Commentary

Multi-Asset Quarterly Investment Performance Review and Outlook

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A Message for the New Year: Priorities for 2016 & Beyond

Posted by Catherine Keating, President and Chief Executive Officer, Commonfund on Jan 4, 2016

Topic: Asset Allocation

As we begin 2016, our Chief Executive Officer shares thoughts on Commonfund, views on the capital markets and priorities for 2016 and beyond. For a more detailed look at our expectations and portfolio positioning going forward, download our 2016 Global Economic and Investment Outlook.

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Global Economic & Investment Outlook:
2016 – A Year of Transition

Posted by Commonfund on Jan 4, 2016

Topic: Asset Allocation Equities Fixed Income Hedge Funds Market Commentary Private Capital

Our 2016 Global Economic and Investment Outlook provides a detailed look at our expectations and portfolio positioning going forward.

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The Curious Case of Risk Exposures in Diversified, Multi-Asset Class Portfolios – A Deep Dive

Posted by Jess Gaspar, PhD, Managing Director, Head of Quantitative Research | Suresh Iyer, CFA, PhD, Director, Quantitative Research on Dec 30, 2015

Topic: Asset Allocation Equities Quant Strategies

Previous research at Commonfund has demonstrated that a traditional 70/30 stock/bond portfolio has north of 99 percent of its risk allocated to equities. Thus portfolio risk in the traditional portfolio is not broadly diversified across equities and fixed income, but rather, highly concentrated in one exposure: equities. Does a more diversified, multi-asset class portfolio do a better job of balancing risk?

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Hedge Funds: An Instructional Look

Posted by Commonfund on Dec 4, 2015

Topic: Asset Allocation Hedge Funds

Hedge funds often account for the largest share of institutions’ allocation to alternative investment strategies yet, hedge fund strategies can be difficult to understand. We have created a reference guide that will be useful when considering hedge funds in your portfolios.

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The Curious Case of Risk Exposures

Posted by Jess Gaspar, PhD, Managing Director, Head of Quantitative Research | Suresh Iyer, CFA, PhD, Director, Quantitative Research on Oct 30, 2015

Topic: Asset Allocation Quant Strategies Risk Management

Our research at Commonfund has found that a 70/30 stock/bond portfolio has north of 99 percent of its risk, as measured by standard deviation, allocated to equities. Thus, portfolio risk typically is not broadly diversified across equities and fixed income, but rather, highly concentrated in one exposure: equities. Does a more diversified portfolio, such as a typical endowment portfolio, do a better job of balancing risk?

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Multi-Asset Quarterly Investment Performance Review & Outlook | Q2 2015

Posted by Steve Snyder, Managing Director, Head of Multi-Asset Program, Commonfund | Nick De Monico, Former interim CIO, Commonfund | Jeff Long | Alec Rapaport, Managing Director, Head of Fixed Income Strategies | Michael Strauss, Chief Investment Strategist and Chief Economist on Jul 22, 2015

Topic: Asset Allocation Equities Fixed Income Market Commentary

Multi- Asset Quarterly Investment Performance Review and Outlook

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Multi- Asset Quarterly Investment Performance Review

Posted by Steve Snyder, Managing Director, Head of Multi-Asset Program, Commonfund | Nick De Monico, Former interim CIO, Commonfund | Jeff Long | Alec Rapaport, Managing Director, Head of Fixed Income Strategies | Michael Strauss, Chief Investment Strategist and Chief Economist on Apr 6, 2015

Topic: Asset Allocation

Multi- Asset Quarterly Investment Performance Review and Outlook

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Form follows function in multi-asset investing

Posted by Steve Snyder, Managing Director, Head of Multi-Asset Program, Commonfund on Sep 17, 2014

Topic: Asset Allocation Industry Knowledge Outsourced Investing

Interest in multi-asset investing is growing and the inflows confirm it: Institutional assets committed to multi-asset investing are reported to have increased to $773 billion at year-end 2013, up from $442 billion at year-end 2010, while the second quarter of 2014 represented the 11th consecutive quarter of fund flows into the strategy. The trend isn’t confined to the U.S., either, as industry data indicate that in Europe some €62.5 billion was committed to multi-asset funds in the first six months of 2014.

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Global private equity: what and why

Posted by Mark Hoeing, Managing Director | Miriam Schmitter, Managing Director, Commonfund Capital on Aug 17, 2014

Topic: Asset Allocation Industry Knowledge Private Capital

An article in the previous issue of Insight sought to discern the difference between perception and reality in private equity investing generally, and included a companion article focused on European private equity specifically. Now, we take a deeper look at international private equity, with an emphasis on Europe as well as Japan and Australia. Once again, there is a perception gap that may lead long-term institutional investors seeking to diversify their portfolio both by asset class/strategy and geography to overlook what we believe are compelling opportunities outside the U.S. Herewith, the what and why of international private equity.

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Subscribe & Manage Your Frequency to Insights Blog

Posted by Commonfund on Jan 5, 2014

Topic: Asset Allocation Equities Fixed Income Governance and Policy Hedge Funds Industry Knowledge Market Commentary Operating Assets Outsourced Investing Partners People Private Capital Quant Strategies Responsible Investing Risk Management

Subscribe to the Insights Blog from Commonfund to stay informed with the latest information for nonprofit investors and the public sector.

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Long-Term Care – Healthcare’s New Regulatory Regime

Posted by William F. Jarvis, Managing Director, Commonfund Institute on Apr 12, 2013

Topic: Asset Allocation Industry Knowledge

Facing cost pressures and a new regulatory regime, healthcare organizations — especially those in the small and mid-sized range — should consider adopting the principles of the endowment model. Nonprofit healthcare organizations are confronting an unprecedented series of challenges as they strive to maintain positive operating margins in the face of declining reimbursements from insurance companies and government payers. The crisis is particularly acute at smaller and mid-sized organizations. Having played a major role in their communities for decades, they are finding that the healthcare business model is changing.

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Looking Beyond “In-Line” Results

Posted by Jeff Long | Michael Strauss, Chief Investment Strategist and Chief Economist on Feb 13, 2012

Topic: Asset Allocation Equities Market Commentary

A hidden story behind S&P 500 gains is continued improvement in U.S. economic data that provides further support to sustainable, moderate economic activity.

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