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Bloomberg’s Lu Wang features MPI research on AI exposure among the largest U.S. public pension systems. At Bloomberg’s request, MPI used Stylus Pro to investigate the economic exposure to AI across roughly 50 large public pensions, including exposures that may not be visible from reported holdings alone. The analysis found little excess AI exposure on average beyond what is already embedded in broad markets, while highlighting important differences among individual systems. CalPERS stood out in part because of AI-related exposure embedded in its private-fund investments.

Bloomberg’s John Authers “Points of Return” column past week titled Trade War: Victory Over Inflation Now Seems So Yesterday features a comprehensive analysis of challenges facing elite universities in light of potential suspension of federal funding based on MPI research Elite U.S. Endowments: Government Funding and Liquidity Pressure. “What’s preventing these elite schools from calling the president’s bluff? One reason is that their massive endowments are illiquid. Schools face differing financial strain depending on their reliance on government support. Markov Processes International’s analysis shows that about 37% of the biggest US endowments’ assets are in private equity, which is generally illiquid… MPI’s Michael Markov warns that they could thus be forced to sell PE holdings on the secondary market at a discount. The current market turmoil is pushing investors to weigh whether a discount might make sense for them,” writes Richard Abbey, citing MPI data and figures.

Bloomberg News’ Opinion Column Points of Return by John Authers & Richard Annerquaye Abbey covered MPI’s annual 2024 fiscal year Ivy Endowment Review. It focuses on “For this year, Harvard, the nation’s largest endowment, which has had a tough run, made a 9.6% return, finishing third behind Columbia and Brown. Harvard’s outperformance coincides with raised exposure to public tech stocks, both via equity fund managers and hedge funds. As MPI points out, endowment managers who pivoted toward tech stocks have reason to be particularly grateful at a time when alumni donations have been trimmed in response to the fraught climate on campus.”

In “Points of Return” this week, Bloomberg Opinion’s Richard Annerquaye Abbey and John Authers featured a comprehensive discussion of pensions investing based on our FY2024 return estimates for the largest U.S. public pensions: Magnificent Seven: Don’t Dismiss the Correction Too Much – Bloomberg
“Unlike mutual funds, it’s impossible to have anything close to a real-time measure of the performance of the big public pension funds based on their holdings, no matter how tempting the idea may be. While we wait [for pensions to publish their fiscal year performance], an analysis by Markov Processes International using its proprietary model to project the performance of public pension funds managing more than $20 billion in the year from July 2023 to June 2024, came to one conclusion — funds with higher allocation in US equities are poised to outperform. No other asset comes close.”

“Given endowments’ high allocations to private equity, ‘there looks to be more artful navigating ahead,’ Markov said in its study. The schools may need to come up with other sources of cash to cover future spending needs, as private equity hasn’t been returning as much money to investors as expected.

Endowments may need to rely more on their liquid holdings of public stocks and bonds to make up for the shortfall, sell some private equity positions at a discount on the secondaries market or even issue debt, according to Markov, a research firm that studies the opaque world of endowments.”

MPI research A Private Equity Liquidity Squeeze By Any Other Name was featured in Bloomberg News in a story Top Colleges’ Liquidity Pressured by Weak Private Equity Returns by Marion Halftermeyer who closely covers the intersection between GPs and LPs.

MPI’s CEO interviewed by John Authers‘ protege Richard Annerquaye Abbey on Ivy League endowments and how MPI Transparency Lab keeps tabs on risk, return and asset class attribution at the large, elite schools employing the Yale Model. See their Bloomberg Opinion “Points of Return” column “Don’t Declare the Death of the Yale Model Just Yet” covering MPI’s latest FY 2023 Ivy Report Card.

“Quant funds that employed risk parity saw their riskiness as measured by realized volatility levels surging 50% to 80% higher than their stated targets, according to a study from Markov Processes International obtained by Bloomberg based on results through November… Markov found that majority of the 10 popular risk-parity strategies it reviewed saw record levels of volatility, with a “staggering” gap between the winners and losers.” – writes Bloomberg’s Isabelle Lee and senior editor John Authers in his column discussing results of MPI’s research Risk Parity Not Performing? Blame the Weather.

“…how was it possible for so many endowments to make bad choices among private equity and venture capital funds? The following chart from Markov suggests that it is down to outlandishly wide variations in performance within the private equity/venture capital world,” writes John Authers about MPI’s research in his opinion piece on Bloomberg.

Last week, President Barack Obama signed the Puerto Rico Oversight, Management, and Economic Stability Act, or PROMESA, into law. The much-anticipated and debated legislation gives Puerto Rico a path towards restructuring its debt. Learn more on Bloomberg Brief.