Nine out of 10 endowments and foundations surveyed by US consulting firm NEPC have some form of investment in China, and few CIOs are planning changes to their institutions’ portfolios despite geopolitical fears such as a trade war between the US and China.
Geopolitical concerns do seem to be touching off market volatility, but that hasn’t forced widespread portfolio changes. Three-quarters of those surveyed by NEPC in February said they have stayed put. Half also said they think that the rise in volatility plays into hedge fund managers’ strategies, in particular global macro and long volatility strategies.
Just over 73% of respondents said they have more than 10% of their portfolios allocated to alternative investments (including hedge funds).
Looking strictly at long-term returns, those surveyed were less adamant that hedge funds will come out on top with most (59%) saying that private equity will generate the greatest return over the next three to five years. Only 15% said the same of hedge funds and 11% of commodities strategies.
NEPC works with more than 100 endowments and foundations representing more than $62bn in combined assets.