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Investment Strategy | Insights Blog
Stewards of endowments have long been advised that allocating to illiquid investments is critical to achieving long-term returns. Rather than trust conventional wisdom, Commonfund conducted research...
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Investment Strategy | Articles
On average over the past decade, independent schools participating in the Commonfund Benchmarks Study® of Independent Schools have maintained an asset allocation that stays within a few percentage...
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Investment Strategy | Insights Blog
There are fundamental principles of effective endowment management that we have organized into what we call “the 6 Ps of Investment Stewardship”– Purpose, Policy, Process, Portfolio, People and...
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Investment Strategy | Insights Blog
In the midst of a global pandemic, many non-profit business models are being challenged which has put significant pressures on staff, governing boards and committees. These pressures on time and...
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Investment Strategy | Insights Blog
This year has been incredibly difficult. One of the most contentious and turbulent presidential elections and transitions in American History. COVID-19 and the consequential social and economic...
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Investment Strategy | Insights Blog
Despite the fall semester looking much better than the worst-case scenarios contemplated in early summer, higher education in America continues to grapple with the enormous challenges that the...
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Investment Strategy | Insights Blog
Private capital investors use a particular set of quantitative and qualitative measures to assess performance. While the standard benchmarks used for marketable securities are sometimes applied to...
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Investment Strategy | Insights Blog
Best practice for nonprofits is to issue a Request for Proposal (“RFP”) for an investment management partner every market cycle. Typically, that is at least every 7 to 10 years, or as it is...
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Investment Strategy | Insights Blog
In partnership with the Council on Foundations, the National Center for Family Philanthropy has released Balancing Purpose, Payout, and Permanence: A Strategy Guide. Commonfund Institute is very...
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Investment Strategy | Insights Blog
At Commonfund, we believe diverse managers offer clients access to investment talent and valuable investment opportunities and therefore should be explored and invested in. Overlooking the merits of...
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Investment Strategy | Insights Blog
Key takeaways During periods of dislocation in high-quality credit, investors should stay the course within fixed income portfolios and maintain active risk to benefit from the inevitable rebound...
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Investment Strategy | Articles
William Massy has spent his entire career at the intersection of academia and administration, as a microeconomist; professor, dean and CFO at Stanford University; author; and now, an independent...
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Investment Strategy | Insights Blog
Few markets have been as heavily impacted by the onset of the global pandemic as real estate. Real estate is considered a hard asset that “you can touch and feel”, but during a pandemic no one wants...
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Investment Strategy | Articles
The Council on Foundations has acted to support its members, their nonprofit partners, and the people and communities hit hardest by the impacts of COVID-19 by asking members to sign a pledge of...
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Investment Strategy | Insights Blog
Risk surrounds us, and for investment fiduciaries it is inescapable if meaningful real returns are to be sought. While risk and return constitute the axes upon which investment portfolios are built,...
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Investment Strategy | Articles
With nearly $1 billion in assets, The California Wellness Foundation (Cal Wellness), is one of California’s largest public health philanthropic institutions. Cal Wellness awards approximately $43...
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Investment Strategy | Insights Blog
A strong private capital program requires consistent, diversified investing over time. It is also necessary to have— or obtain externally— resources for research and due diligence before you invest;...
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Investment Strategy | Insights Blog
With the equity markets retracing some of the losses that occurred in the first calendar quarter of 2020, endowment market values are likely recovering more quickly than we may have feared during the...
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Investment Strategy | Insights Blog
In the ongoing debate about active versus passive investing, conventional wisdom posits that active investing outperforms passive in recessionary or bear market environments. The question is: Will...
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Investment Strategy | Articles
"Instead of just optimizing for skill, why don’t we optimize for luck? " Optimize Luck originated in a group discussion I facilitated for the Investment Institute, a membership organization for...
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Investment Strategy | Insights Blog
Over the past decade U.S. equities have consistently outperformed international markets, leading many investors to question the role of non-U.S. equities in their portfolio. While the current cycle...
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Investment Strategy | Insights Blog
On January 16th Commonfund held its first invitational Diverse Manager Day. The day was made possible as a result of the success we had from submissions to the Diverse Manager Portal launched last...
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Investment Strategy | Articles
Dimple Abichandani is Executive Director of the General Service Foundation (“GSF”), a private grantmaking family foundation that dedicates all its resources to bringing about a more just and...
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Investment Strategy | Insights Blog
Institutional investors overseeing long-term pools of capital typically define their strategic asset allocation with specific targets and bands or ranges around those targets, which allow for...
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Investment Strategy | Insights Blog
In the fall of 2018, Commonfund announced the creation of its Diversity and Inclusion Office with the mission to “intentionally promote and foster inclusion and equity across Commonfund and our...
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Investment Strategy | Insights Blog
What is Gender Lens Investing? Gender lens investing has garnered significant traction in the last decade. Broadly speaking, gender lens investing aims to achieve financial returns and benefit...
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Investment Strategy | Insights Blog
Michael Rowland is the Commonfund Institute Summer Intern. He is a rising senior at Case Western Reserve University. He is majoring in Finance and Accounting. What are Diverse and Emerging Manager...
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Investment Strategy | Insights Blog
In Part I of this blog series, “Investment Manager Fees: Out of Sight, Out of Mind”, we discussed our approach to determining the value of an asset manager and how we might calculate a fair price for...
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Investment Strategy | Insights Blog
One of the most pressing questions facing fiduciaries is that of investment management fees. We think it is a healthy and necessary discussion, as even small fees can have a big impact on performance...
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Investment Strategy | Insights Blog
Investors have limited control over the returns their portfolios generate. They have more control over their spending. That doesn’t make it easy. Compared to some earlier periods, volatility in the...
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Investment Strategy | Insights Blog
On the surface, hiring two (or more) multi-asset managers to manage an entire portfolio may seem like a good idea. Intuitively, it would seem to reduce manager concentration risk, and provide...
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Investment Strategy | Insights Blog
The biggest challenge in implementing any type of responsible investment program is in clearly defining and prioritizing those issues most relevant to an organization. Although it may seem a...
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Investment Strategy | Insights Blog
This blog is reprinted with permission by Net Assets, published by the National Business Officers Association (NBOA). The original article can be found here. Investment guidelines enable...
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Investment Strategy | Insights Blog
Let’s start with a quick recap of Part 1 of this story, which can be boiled down to three main points: Investors often spend too much for market beta, paying “2 and 20” for hedge funds that deliver...
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Investment Strategy | Insights Blog
At the risk of beating a dead horse, hedge funds are not an asset class. This is especially true in the way in which Commonfund selects and constructs its hedge fund portfolios: focusing...
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Investment Strategy | Insights Blog
Ten years ago Lehman Brothers failed, representing the largest bankruptcy in history, and accelerating a global financial crisis that would knock many non-profit portfolios backward. This came on the...
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Investment Strategy | Insights Blog
Costs matter. With expectations for lower market returns over the coming years, every basis point of net performance is particularly important. Furthermore, the compounding effect of high fees can...
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Investment Strategy | Insights Blog
Three days after becoming Executive Director of the Commonfund Institute, I found myself at Yale University in New Haven giving welcoming remarks at our annual educational program. Although I will...
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Investment Strategy | Insights Blog
At Commonfund, we aim to build multi-manager, active risk equity portfolios with a clear objective of consistent outperformance versus passive policy benchmarks. Our approach is to take intentional...
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Investment Strategy | Insights Blog
Well, the party may finally be over. Like the college dean who shuts down the campus party, the Fed has finally taken away the interest rate punch bowl that investors have enjoyed for so long. It may...
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Investment Strategy | Articles
The benefits of diversity are widely recognized in the work place and among educational institutions and other nonprofits. Yet, the concept of investment management firms that are minority owned and...
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Investment Strategy | Articles
In March, capital markets entered their tenth year of post-crisis recovery. For diversified portfolios, these have been some of the most profitable times, characterized by strong returns, positive...
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Investment Strategy | Insights Blog
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...
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Investment Strategy | Insights Blog
At Commonfund, we scour the globe to find investment managers that we believe have the ability to consistently produce excess returns (alpha) over and beyond their benchmark. But alpha alone is not...
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Investment Strategy | Insights Blog
Narrow market leadership in the U.S. and Emerging Markets proves challenging for active managers Narrow markets are not uncommon to equity investors. They tend to manifest themselves during the best...
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Investment Strategy | Insights Blog
With the release of the annual NACUBO-Commonfund Study of Endowments (NCSE) comes the obligatory comparison of 1-year returns. “How did we do relative to the 12.2 percent average return” is a...
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Investment Strategy | Insights Blog
2017’s tax legislation is the latest in a growing list of challenges facing higher education. The new excise taxes on endowment earnings of the largest private universities, coupled with the...
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Investment Strategy | Insights Blog
Summary TODAY, THERE IS A GOOD DEAL OF HAND WRINGING OVER THE RISK OF RISING RATES. WHILE RISING LONG-TERM RATES COULD BE A HEADWIND FOR CORE FIXED INCOME, AS LONG AS RATES RISE FAIRLY MODESTLY THE...
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Investment Strategy | Insights Blog
In most Investment Policy Statements there is often a reference to two important, but conflicting, objectives: one, to preserve the purchasing power of the long-term portfolio in real terms, and two,...
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Investment Strategy | Insights Blog
As we progress through calendar year 2017, we have witnessed the continuation of the equity bull market started in 2009. One difference however, is that leadership has turned (finally!) to non-U.S...
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Investment Strategy | Insights Blog
Like nearly everything in the financial markets, risk is cyclical. History repeats itself. The echoes of past crises are always heard in present ones, yet new crises are rarely predicted and not...
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Investment Strategy | Articles
In a series of articles, we have addressed two recent investment “fatigues” experienced by institutional investors: Active vs. Passive; and Global (ACWI) vs. US benchmarks. In this article, we...
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Investment Strategy | Insights Blog
Leveling the Field in the “Tug of War” Between Active and Passive… Active Equity Manager Universal Objective: Outperform the Passive Alternative It’s undeniable that every active equity manager’s...
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Investment Strategy | Insights Blog
The natural resources sector is often characterized as cyclical, as producers and service providers experience underlying exposure to and commensurate volatility of commodities in the oil and gas,...
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Investment Strategy | Insights Blog
While most institutional portfolios have allocations to investment grade corporate credit, as a strategic allocation high yield and emerging market credit (liquid credit) are sometimes overlooked....
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Investment Strategy | Insights Blog
Like the build-up of lactic acid in your muscles after a strenuous workout, the underperformance of Morgan Stanley Capital International All Country World index (MSCI ACWI) vs. the Standard & Poor’s...
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Investment Strategy | Articles
Key Insights While opening opportunity to many New York families, the recently enacted Excelsior Scholarship Program will likely stress the financial resources of small private colleges and...
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Investment Strategy | Insights Blog
Few topics get investors’ attention as much as fees. We wouldn’t be human if we all didn’t want to know, in detail, how much something costs. In the world of investing, fees are an even more...
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Investment Strategy | Articles
With many market participants expecting low nominal returns across traditional asset classes in the coming years, the challenge of structuring a portfolio to achieve CPI +5%, or long-term purchasing...
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Investment Strategy | Insights Blog
At Commonfund, we understand the challenge institutions face of maintaining the purchasing power of their endowment. In fact, achieving a rate of return sufficient to cover inflation, distributions...
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Investment Strategy | Articles
Stuck in the past or ever-evolving? The endowment model gets a hard look eight years into the current market cycle. With core tenets of the endowment model seemingly under stress for the last several...
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Investment Strategy | Insights Blog
The liquidity markets have experienced one of the largest disruptions since the inception of SEC Rule 2a-71 in the early 1970’s. Over the past few months, we have seen a massive shift of investor...
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Investment Strategy | Insights Blog
Nonprofit institutions have the distinct advantage of having the longest time horizon of any investors – often perpetuity. This affords an opportunity to consider investments based on secular trends...
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Investment Strategy | Insights Blog
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”...
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Investment Strategy | Insights Blog
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...
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Investment Strategy | Insights Blog
Mounting cost pressures are forcing small and mid-sized nonprofit healthcare organizations to consider adopting endowment management practices similar to those used elsewhere in the nonprofit sector....
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Investment Strategy | Insights Blog
Endowed institutions differ in their missions, capabilities and resources, and investment policy statements naturally mirror these differences. In that sense, there is no single ‘right’ investment...
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Investment Strategy | Insights Blog
Beginning in the second half of 2015, there was growing caution that started to impact pricing and investment activity in early 2016. This valuation cooling period and subsequent shift in mindset...
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Investment Strategy | Insights Blog
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...
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Investment Strategy | Insights Blog
“There are three things that matter in property: location, location, location”. While the age-old adage still holds in many respects, real estate risks, as with the risks associated with all asset...
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Investment Strategy | Insights Blog
It’s not easy being an active equity manager these days. As the chart below depicts, active managers have just come through the worst period for returns in several decades. The chart shows the...
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Investment Strategy | Insights Blog
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...
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Investment Strategy | Articles
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...
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Investment Strategy | Insights Blog
Discussions about whether responsible investing strategies help or hurt investment performance are complicated by the fact that, there are several broad categories of responsible investing practice...
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Investment Strategy | Insights Blog
An operating charity in the Northeast is in the process of implementing a risk-based investment policy for its $30 million endowment. The organization’s seven-member Investment Committee includes...
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Investment Strategy | Articles
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...
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Investment Strategy | Articles
Reprinted from Institutional Investor’s Alpha Spring 2016 issue The growth of the hedge fund industry over the past decade has been tremendous, with more and more institutional and retail investors...
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Investment Strategy | Articles
Most things function a lot better when all the moving parts work together—nonprofit institutions included. The synergies afforded by collaboration across organizational boundaries may be the most...
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Investment Strategy | Articles
Reprinted from Volume 17, Number 1, 2016 of The Journal of Investment Consulting by Mark J.P. Anson Private assets such as private equity and venture capital have long been a thorn in the side of...
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Investment Strategy | Insights Blog
Outsourced investment management, once primarily a solution for small institutions with limited resources, is now used by a broad range of long-term investors. When properly implemented, outsourcing...
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Investment Strategy | Articles
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’...
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Investment Strategy | Insights Blog
It’s straightforward to get an answer to that question, at least superficially: draw at random from a manager universe, build hypothetical portfolios with the selected managers, track performance,...
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Investment Strategy | Insights Blog
Currency risk can best be described as the surprise impact that currency exposure has on an investment portfolio. Although currency risk typically confounds investors, it is easy to measure – it is...
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Investment Strategy | Articles
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....
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Investment Strategy | Insights Blog
Assets under management (AUM) among hedge funds has always been characteristically top-heavy, with the majority of capital in the hands of a relatively small number of managers. While the hedge fund...
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Investment Strategy | Insights Blog
The following methodology may be of use in helping you to understand more fully what your organization pays for investment management costs. Identify the fees you pay at the overall portfolio level...
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Investment Strategy | Articles
How have cultural, religious and social service institutions’ investment portfolios changed in response to the financial and market environment that has prevailed over the last several years? While...
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Investment Strategy | Articles
Today, few OCIOs that serve nonprofits are total institutional partners. Six questions can help you find one who takes a holistic approach. Not long ago, the definition and scope of an “Outsourced...
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