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Can Simple Asset Allocation Strategies Outperform the Ivy League Endowments?

Douglas Roberts, Fall 2017, Volume 20, No.2


Free Download: The Journal of Wealth Management


During the last 30 years, the compound annual return of the endowments of the Ivy League and other comparable educational institutions have received worldwide attention for exceptional performance over an extended period of time. The transition from a pure asset allocation strategy in public markets to one with a large allocation to alternative assets is often cited as the primary reason for the superior investment performance.


An alternative explanation is that the superior performance is due to a riskier portfolio allocation through the use of alternative investments. This can take the form of a higher equity allocation, an equity allocation to riskier securities, or the increased use of portfolio leverage through these alternative investment vehicles. There have been studies to analyze if these alternative investments have added significant value to endowment performance which could not have been created with the addition of risk using these factors applied to a conventional public asset allocation.


We examine the investing success of the endowments of Ivy League universities and other comparable institutions and compare them to several simple asset allocation strategies in the public markets. We want to determine if these alternative investments offer additional value which could not be created through increasing the level of risk in these public portfolios, possibly through the use of leverage.

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Source: Channel Capital Research Institute, LLC. Past performance is not an assurance of future results. The performance results shown herein are hypothetical and backtested and are not that of any fund or account managed by Channel Capital Research Institute, LLC. (Does not reflect performance information for any strategy available for investment).



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