Markov Processes International

Report: Ivy Endowments Deliver Strong 2018 Returns, Though Questions of Longer-Term Efficiency Loom Large

Summit, NJ/London/Tokyo (Nov. 29, 2018) ― Markov Processes International (MPI), a leading provider of investment research, technology, analytics and indices for the global investment management industry, today announced the publication of its 2018 Ivy League endowment performance analysis report.

Topping the list of key takeaways in this year’s report is that the Ivies delivered a solid performance, with all but Columbia registering double-digit returns and all beating the traditional 60-40 portfolio, a commonly used benchmark for measuring endowment performance. According to MPI’s returns-based analysis, private equity and venture capital exposure appear to have been significant contributors to returns in fiscal year 2018, which marks a reversal of 2017 performance, when public markets outperformed private investments.

“While the drivers of returns in 2018 changed for the Ivies, they again had a good year, which lends credence to their approach to diversification over the short-term,” said Apollon Fragkiskos, director of research at MPI. “But since the investment horizon that endowments focus on is long-term, it makes sense to examine performance over a longer time period. What makes 2018 somewhat remarkable is that it’s the first time in two decades that a 60-40 portfolio beat all Ivies in 10-year performance.”

The report goes on to examine how efficient Ivy portfolios are when compared to the traditional 60-40 portfolio. Using an approach for measuring endowment risk that was recently published in the CAIA’s Alternative Investment Analyst Review, the report highlights that the Ivies appear to take substantial risks to achieve their returns, resulting in somewhat inefficient portfolios that other institutional and high-net worth investors should be hesitant to replicate without careful considerations.

“The average investor does not have the luxury of infinite time horizons that give endowments the ability to withstand very high levels of illiquidity within their portfolio,” Fragkiskos added. “Nor do they have the same access to well-established, top-performing funds and in-house monitoring or research capabilities. It is, therefore, important that investors who attempt to mimic the Ivy endowment model understand and carefully manage the risks.”


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