Consulting Firm NEPC has recently released a survey indicating that many endowments and foundations are expecting a worsening economic outlook. According to the report, the number of endowments that are concerned about an economic downturned has tripled.
A total of 60% of the endowments and foundations surveyed express concern of a slowing global economy, damaging the performance of their investment funds. This increase is a drastic change from the 21% who expressed concerns over the economy when surveyed last year. Furthermore, a total of 36% of endowments and foundation believe that the economy will, in fact, slow down during the year, a change from 13% just a year ago.
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“Economic pressures weigh heavily on endowments and foundations’ minds as we approach the midpoint of 2019,” Cathy Konicki, head of NEPC’s endowments and foundations practice, announced in a press release. “As investment committees anticipate a potential global slowdown for the first time in a decade, it has never been more important to construct an investment portfolio balanced to withstand volatility.”
The survey went on to explain that 31% of endowments and foundations believe that private equity will be the best performing asset class in the coming year. As a result, 41% of those surveyed said they would be allocating more funds to private equity. Meanwhile, a total of 51% claimed that their portfolio strategy would not be changed going forward. The rest of the respondents expect to place greater allocations into emerging markets, real estate or hedge funds, respondents who held this position represent 28%, 23%, and 32% of those surveyed, respectively.
The report concludes with respondents voicing their anticipation for fundraising activity in the coming year. Some 36% exclaim that there is concern about how tax reform will influence fundraising activity. The full report can be found here.