Endowment Managers Stand Pat Despite Market Worries, Survey Says

Study title: NEPC Endowment and Foundation Survey

Organization: NEPC, an investment consulting firm

Summary: The leaders of institutional endowments are worried about macroeconomic factors such as global political instability and trade wars, as well as sustained market volatility. Still, three quarters of survey respondents said they have made no changes to investment portfolios because of recent market fluctuations.

“Interestingly, with those being the major concerns now, endowments and foundations are not doing a whole lot with regard to changing their portfolios,” Cathy Konicki, a partner at NEPC and the head of the investment consulting firm’s endowment and foundation practice, told the Chronicle in an interview.

The vast majority of survey respondents said that they believe the domestic economy is in the same or in a better place that one year ago.

Konicki said that projected lower returns from equities is another concern for those leading foundations and other types of endowments. And she described the effects of the new tax law on charitable giving as a big “unknown.” Some nonprofit tax-policy experts have predicted a multibillion dollar decline in donations under the law, which Trump signed in December.

“If I get less money in, too, from philanthropy, it could be a double whammy,” she said.

Among the findings:

• Four out of five respondents said they believe that a recent increase in market volatility will be a long-term trend, rather than a short-term hiccup.
• Geopolitical tensions were cited as the greatest risks to investment performance (38 percent), followed by political uncertainty (19 percent).
• 78 percent of institutions rated concerns about a trade war between the United States and China as “moderate,” while 11 percent reported concern as “very high.”
• 72 percent of respondents said they have investments tied to China as part of broader investments in emerging markets, while 8.5 percent said their portfolios include private equity or private debt in China.