The Endowment Model Portfolio Strategy
To increase the total portfolio return expectations, the Endowment Model minimizes bond holdings with low return expectations and unfavorable interest rates and inflation exposure. Holdings can include:
- Both domestic and foreign developed market equities;
- Emerging market equities;
- Real assets such as real estate, commodities, energy related holdings, private equity (holdings in private companies that do not trade on the public markets);
- Absolute return investments such as managed futures and hedge funds that seek to earn returns less correlated to the stock market; and
- Other low correlation assets such as debt instruments with yields linked to interest rates
During implementation, specific decisions and tactics are often determined by unique opportunities, structures and relationships.