The Modern Endowment Allocation Model E-Book

Martin L. Leibowitz

• Herausgeber: John Wiley & Sons
• Kategorie: Fachliteratur
• Serie: Wiley Global Finance Executive Select
• Sprache: Englisch

Seitenzahl: 27

Veröffentlichungsjahr: 2011

Beschreibung

The authors of The Endowment Model of Investing provide an overview in this chapter of the traditional versus modern methods of endowment investing as a basis for understanding diversification and managing equities for endowments today. It is meant as a brief introduction to the topic and book. Discussed is how the tradition of the long term policy portfolio with relatively fixed asset categories was at one point ubiquitous in the endowment and foundation World but how now with increased market volatility and the appearance of attractive new asset classes, this tradition of overly rigid allocations and fixed asset buckets is questioned and put into old news. The late Peter L. Bernstein was one of the earliest and most articulate authors arguing for a rethinking of the policy portfolio concept. This chapter includes topics on: * Institutions working in a more flexible fashion with allocations * wider allocation bands * using assets that do not necessarily fit into the traditional categories

Leseprobe

Contents

Cover

Title Page

Copyright

Part One: The Modern Endowment Allocation Model

Chapter 1: The Modern Endowment Allocation Model

TRULY LONG-TERM ORIENTATION

NOVEL ASSET CLASSES AND SPECIAL ACCESS

REMAKING THE INVESTMENT MANAGER RELATIONSHIP

MORE MARKET-SENSITIVE ALLOCATIONS

ASSET ALLOCATION

BETA-BASED RISK AND RETURN: THE SIGMA AND BETA LINES

NOTES

REFERENCES

Copyright © 2010 by Morgan Stanley. All rights reserved.

Disclaimer. This content is excerpted from The Endowment Model of Investing: Return, Risk, and Diversification, by Martin L. Leibowitz, Anthony Bova and P. Brett Hammond (978-0-470-48176-9, 2010), with permission from the publisher John Wiley & Sons. You may not make any other use, or authorize others to make any other use of this excerpt, in any print or non-print format, including electronic or multimedia.

Limit of Liability/Disclaimer of Warranty: While the publisher and author have used their best efforts in preparing this book, they make no representations or warranties with respect to the accuracy or completeness of the contents of this book and specifically disclaim any implied warranties of merchantability or fitness for a particular purpose. No warranty may be created or extended by sales representatives or written sales materials. The advice and strategies contained herein may not be suitable for your situation. You should consult with a professional where appropriate. Neither the publisher nor author shall be liable for any loss of profit or any other commercial damages, including but not limited to special, incidental, consequential, or other damages.

The authors of The Endowment Model of Investing provide an overview in this chapter of the traditional versus modern methods of endowment investing as a basis for understanding diversification and managing equities for endowments today. It is meant as a brief introduction to the topic and book. Discussed is how the tradition of the long term policy portfolio with relatively fixed asset categories was at one point ubiquitous in the endowment and foundation World but how now with increased market volatility and the appearance of attractive new asset classes, this tradition of overly rigid allocations and fixed asset buckets is questioned and put into old news. The late Peter L. Bernstein was one of the earliest and most articulate authors arguing for a rethinking of the policy portfolio concept.

This chapter includes topics on:

• Institutions working in a more flexible fashion with allocations • wider allocation bands • using assets that do not necessarily fit into the traditional categories

Derived from Leibowitz, Martin L., Anthony Bova, and P. Brett Hammond. The Endowment Model of Investing: Return, Risk, and Diversification. Hoboken, NJ: John Wiley & Sons, 2010. 978-0-470-48176-9; 336 pp.

978-1-118-00639-9 978-1-118-00638-2

Part One

Alpha/Beta Building Blocks of Portfolio Management

CHAPTER 1

The Modern Endowment Allocation Model

Over the past two decades, many institutional investors, beginning with the larger ones, adopted a broadly diversified asset allocation with greatly reduced allocations of traditional U.S. equities and bonds. Endowments and foundations, in particular, adopted this allocation model.

TRULY LONG-TERM ORIENTATION

The traditional and widely used institutional asset allocation benchmark or policy portfolio commonly consisted of a majority of U.S. equities and a reciprocal proportion of U.S. bonds. Beginning in the 1990s, endowments increasingly took advantage of the nature of their liabilities to adopt a purposeful diversification directed toward long term outcomes and a much-reduced focus on the short term.

NOVEL ASSET CLASSES AND SPECIAL ACCESS