Top investment considerations for endowments and foundations 2024 

05 December 2023

We identify the five considerations that we believe endowments and foundations should have front and centre as they look ahead.

While every year brings new challenges, the long-term perspectives of endowment and foundations investors can help them ride out surprises. Our current long-term view on the world is captured in our paper, Themes and opportunities 2024: An age of agility. The instability and uncertainty that have characterised the global economy and geopolitics for several years have provided a familiar backdrop for all investors, but endowments and foundations (E&Fs) have independent values and objectives, with missions that often go far beyond simply balancing profits and costs, along with stakeholders (from beneficiaries to donors) with different expectations and needs. 

We believe that in an age of agility such characteristics can be useful. With that in mind, we think that E&Fs should consider the following:

Top investment considerations for endowments and foundations

Inflation poses a triple threat to E&F portfolios through erosion of spending capacity for their mission, a diminished real value of their investment returns and increasing complexity and illiquidity in the design of their investment portfolios.

In periods of instability, long-term asset owners such as E&Fs have a distinct advantage over for-profit investors: time. With annual or even quarterly rates of return not necessarily imposing the same acute pressure as on other investors, new opportunities may emerge for investment.

Amid long-term systemic change and the potential for surprises at an asset class level, it makes sense to consider an audit and ongoing monitoring of intended and unintended exposures and risks.

E&Fs have a particular exposure to and interest in sustainability given that they are frequently linked to issues of environmental protection, poverty reduction, education, healthcare and other quality-of-life issues. Succeeding in strategies in this area is of paramount importance.

Good governance is a value creator for E&Fs, helping determine strategic asset allocations and underpinning all the key themes of 2024. Our recent research puts a value of up to 115 bps on good governance practices among E&Fs, demonstrating the impact the right structures and processes can have on even well-run and carefully chosen portfolios.

Top investment considerations for endowments and foundations 2024

Learn more about the top investment considerations for endowments and foundations in 2024.
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