The Principles Of Endowment Style Investing

Since COVID-19 started, Koda has seen a significant increase in larger charities and sophisticated non-profit groups reassessing how they manage their cash and reserves. Investment committees who realise they are operating in a new paradigm are re-evaluating their asset allocations and looking for better diversification.

By observing how successful investors such as Yale University and Australia’s Future Fund invest, we find that these institutions adopt an endowment-style approach to investing which has helped them generate consistent long-term returns while preserving the capital invested even during market crises such as the GFC and COVID-19.

An endowment-style approach to investing is the solution to managing long-term capital in a world full of uncertainty. This investment approach offers a set of guidelines and principles, validated by renowned university endowments, to help non-profit organisations manage their capital with lower risk and generate more consistent returns.

In this paper we discuss the principles of endowment style investing and how this approach leads to greater diversification, lower levels of volatility and the increased likelihood of achieving objectives over the long-term.