The Greenwich Associates study of 563 endowments found that 60% invest in alternative asset classes, which now comprise 23% of their portfolios, on average. The Commonfund Institute commissioned the study.
Not surprisingly, larger institutions allocate more funds to private equity, hedge funds and venture capital. Endowments with more than $1 billion investing nearly a third (29%) of their funds in alternative investments, compared with just 5% of the assets of endowments with less than $10 million in assets, according to Dow Jones.
Of the investment in alternative investments, the average institution is investing:
- 28% in hedge funds
- 24% in venture capital
- 22% in private equity
The study also found that large endowments tend to be more successful investors. Endowments of more than $1 billion earned an average return of 23.9% last year, compared with just 13.7% on average for those with less than $10 million.