Endowment Managers Still Upbeat on Economy, Survey Says

Title: “Endowment & Foundation Q1 2017 Survey Results”

Organization: NEPC

Summary: Managers of nonprofit endowments were upbeat about the state of the U.S. economy in 2017’s first quarter but slightly less so than in the final quarter of last year, according to the latest survey by NEPC, an investment-consulting firm.

Fifty-seven percent of respondents said the economy is doing better than at the same time last year, down from 64 percent who said the same in late 2016.

More than half of those polled — 55 percent — expect the S&P 500 to generate returns of between 6 and 10 percent this year.

NEPC surveyed 74 organizations online in May. Among the findings:

•  ”Geopolitics and political uncertainty” was the most frequently cited potential threats to investment performance in the short term, among several categories listed in a survey question. Thirty-seven percent of organizations named that factor, with 34 percent saying a slowdown in global growth posed the greatest threat.
•  Among asset classes, emerging-market stocks were named as likely to be the strongest performer in 2017, picked by 39 percent of organizations.
•  Twenty percent of respondents said more than 30 percent of their assets were invested in passively managed, or index, funds. The most commonly cited reason was to save on management fees.

For more on what endowment managers are thinking about 2017’s market prospects, see our recent article on charities’ and foundations’ investment performance.