Are Elite Endowment portfolios and returns replicable for other investors? In this episode we unpack what we can learn from some of the most famous institutional investors: endowments. We discuss how their process is repeatable, but the evidence suggests their performance is not. We discuss the challenges of evaluating performance, the debate between whether they are taking more risk vs different risk to achieve higher absolute performance, how lessons from Moneyball can teach investors to play their own game, and more.

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Chapters

00:00 Intro – understanding endowments unique opportunities and constraints

08:04 Performance or Process¹ – process and governance offer more tangible lessons for investors

13:52 Spending Policies¹ – how separation of powers enables sustainable withdrawal rates throughout market cycles

19:53 Asset Allocation Insights², ³, ⁴, ⁵ – the research shows average endowment does not add alpha over simple indexes

27:39 Revisiting the Three Sources of Alpha³, ⁶, ⁷ – the evidence suggests any advantages from endowments do not come from informational alpha, it comes from asset allocation decisions

30:00 What do Elite Institutions Do Differently: Alternatives²,³,⁷ – the real debate is whether they are taking different risk or more risk

36:15 Democratization of Alternative Investments – questions to ask to determine if the alleged benefits of an investment transfer to you as the investor

44:06 Structural Advantages of Endowments – are you the NY Yankees or Oakland A’s? Play your game and you can still be successful

Sources

¹The Interaction of Spending Policies, Asset Allocation Strategies, and Investment Performance at University Endowment Funds (Brown, 2013)

² NACUBO Allocations and Performance (2024)

³ Do (Some) University Endowments Earn Alpha? (Barber, 2013)

⁴ What Does Nevada’s $35 Billion Fund Manager Do All Day? Nothing (WSJ)

⁵ Nevada 2024 Update

⁶ The Three Ways to Beat the Market (And Why Most Investors Don’t) | GS #2

⁷ Endowments in the Casino: Even the Whales Lose at the Alts Table (Ennis, 2024)

Greenspring Advisors is a Registered Investment Advisor (RIA) and does not provide tax, legal or accounting advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. You should consult your own tax, legal and accounting advisors before engaging in any transaction. Information contained herein has been obtained from sources considered reliable, but its accuracy and completeness are not guaranteed. This material has been prepared for information purposes only and is not a solicitation or an offer to buy any security or instrument or to participate in any trading strategy. Past performance is no guarantee of future results.