Nasdaq Shifts Endowment Index Allocations

Ahead of small adjustments being made for 2018, the Endowment Index gained 17.61% for the calendar year ended December 31, 2017.

The Endowment Index, compiled by Nasdaq, represents the “investable opportunity for managers of portfolios utilizing an endowment investment methodology or otherwise incorporate alternative investments within a comprehensive asset allocation strategy.”

The Endowment Index uses an objective, rules-based construction methodology based upon the portfolio allocations of over 800 educational institutions managing over $500 billion in total assets. Each of the 19 sub-indexes that currently comprise the index are investable, and contained within those sub-indexes are over 33,000 underlying securities.

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As of February 1, 2018, the index has been reconstituted and rebalanced “to maintain true representation.”

The specific index changes for 2018 versus 2017 are as follows:

  • Global equity moves from 35% to 36%;
  • Global fixed income remains flat at 8%;
  • Private equity and venture capital remains flat at 17%;
  • Hedge Strategies drop from 20% to 19%;
  • Real Assets remain flat at 15%; and
  • Other assets remain flat at 5%.

In terms of 2017 performance, the Endowment Index gained 17.61% (total return) for the calendar year ended December 31, 2017. For the fiscal year as measured by most endowments (ended June 30, 2017), the Endowment Index returned 13.86%, which compared to the average university endowment portfolio return of 12.20% (net of fees), as reported by a Commonwealth NACUBO study.