Change In Endowment Fund Focus May Predict Change In Mainstream Investor Focus Down The Road

Tuesday, July 31, 2012 06:57
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Change In Endowment Fund Focus May Predict Change In Mainstream Investor Focus Down The Road

Tags: asset management | endowments | investment strategies

In the 1970s, college endowment funds were early entrants on the trend of socially aware investing. But that trend has begun to go mainstream. Endowments today tend to focus on single issues such as investing in tobacco. They are also doing more indirect, comingled investing as well as more alternative investments that are highly illiquid.

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There have been many studies recently on sustainable and responsible endowment fund management but little verification that endowments are indeed making sustainable investments. This is largely because of misclassification of investments within endowment portfolios and university endowment investment policies are not very transparent.
 
Some universities may say they invest in sustainable investments in their endowment fund portfolios when the investments chosen are outside standard definitions of sustainable investments.
 
Transparency remains a problem even at state-funded universities. Traditional equity investing seems to be on the decline in endowment portfolios. This is interesting in light of the fact that institutional investing styles usually migrate to mainstream investors as such institutional level investments become more accessible.

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