IFA-I educates university endowments to realize the benefits of passive management through risk optimization, global diversification and proper asset allocation.
As an Implemented Consultant, IFA-I conducts careful analysis of an endowment committee’s risk capacity to generate the Investment Policy Statement. This significant document guides the implementation of an Index Portfolio, aligning risk capacity with risk exposure, and maintaining the proper asset allocation through rebalancing and ongoing education.
Index Portfolios Compared with NACUBO Average Asset Pools
The National Association of College and University Business Officers (NACUBO) is an organization with membership totaling more than 2,500 colleges, universities across the US. In part, NACUBO provides comprehensive annual data that reports on the financial status of university endowments, and is the industry standard or such information.
The two charts below reflect 5-year and 10-year comparisons for the average nominal rates of returns for various levels of asset pools vs. IFA Index Portfolios. IFA Index Portfolios were selected for comparison based the average amount of fixed income and cash equivalents as shown in the various investment pools asset allocation. For each of the time periods shown, and at all asset levels, the Index Portfolios outperformed the average endowment’s return. Additionally, the Index Portfolio returns were derived through global diversification, investment transparency and with no use of leverage.
IFA vs. Harvard and Yale
Most investors, institutional and otherwise, would consider themselves quite successful to mirror the performance of world-class endowments such as Harvard and Yale. In fact, their investment performances are considered second to none, and are likely the envy of every endowment investment committee. The very nature of the size of the two highly reputed endowments enables them to invest in capital asset plans that are simply not available to endowments that do not have tens of billions of dollars to manage. In addition to fixed income and asset class equities, big endowments heavily invest in alternative investments in order to further diversify their portfolios, purchasing private equities, hedge funds, commodities, natural resources, real property, etc. They hire expensive staff to implement their complicated investment policy statements. The risk of the portfolios of the behemoth endowments is incalculable, but their returns are not.
The chart below is a 23-year comparison between the returns performances of the Harvard and Yale endowments and the IFA Index Portfolio 100. As you see, over the 23-year period of time, there is scant difference between the returns of the three portfolios. However, the Harvard and Yale endowments carry risk that cannot be quantified, whereas the IFA Index Portfolio carries with it 80 years of risk and return data.
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Past performance does not guarantee future results.
WARNING: Past performance does not guarantee future
results. Investment returns and principal value will fluctuate,
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