ETFdb Logo
ETFdb Logo
  • ETF Database
  • Channels
    • Active ETF
    • Alternatives
    • Beyond Basic Beta
    • China Insights
    • Climate Insights
    • Commodities
    • Core Strategies
    • Crypto
    • Disruptive Technology
    • Dividend
    • Dual Impact
    • Emerging Markets
    • Energy Infrastructure
    • ESG
    • ETF Building Blocks
    • ETF Education
    • ETF Strategist
    • Fixed Income
    • Free Cash Flow
    • Future ETFs
    • Global Diversification
    • Gold & Silver Investing
    • Innovative ETFs
    • Institutional Income Strategies
    • Leveraged & Inverse
    • Managed Futures
    • Market Insights
    • Megatrends
    • Modern Alpha
    • Multi-Asset
    • Night Effect
    • Portfolio Strategies
    • Retirement Income
    • Richard Bernstein Advisors
    • Tax Efficient Income
    • Thematic Investing
    • Volatility Resource
  • Tools
    • ETF Screener
    • ETF Country Exposure Tool
    • ETF Sector Tracker Tool
    • ETF Database Categories
    • Head-To-Head ETF Comparison Tool
    • ETF Stock Exposure Tool
    • ETF Issuer Fund Flows
    • Indexes
    • Mutual Fund To ETF Converter
    • ETF Data for Journalists
    • ETF Nerds
  • Research
    • First Bitcoin ETF
    • ETF Education
    • Equity Investing
    • Dividend ETFs
    • Leveraged ETFs
    • Inverse ETFs
    • Index Education
    • Index Insights
    • Top ETF Sectors
    • Top ETF Issuers
    • Top ETF Industries
  • Webcasts
  • Themes
    • AI ETFs
    • Blockchain ETFs
    • See all Thematic Investing ETF themes
    • ESG Investing
    • Marijuana ETFs
  • Multimedia
    • ETF 360 Video Series
    • ETF Trends on Videos
    • ETF Trends on Podcasts
    • ETF Prime Podcast
  • Company
    • About Us
    • Swag Store
  • PRO
    • Pro Content
    • Pro Tools
    • Advanced
    • FAQ
    • Pricing
    • Free Sign Up
    • Login
  1. Modern Alpha Channel – ETF Database
  2. Head Back to School with Endowment-Like Investing
Modern Alpha Channel - ETF Database
Share

Head Back to School with Endowment-Like Investing

Tom LydonAug 09, 2021
2021-08-09

Investing in form similar to that of large pension plans or college endowments was long a style reserved for the highest levels of investment professionals.

However, that style is now available to a broader audience thanks in large part to WisdomTree’s suite of endowment model portfolios.

“These strategies are designed for investors who seek to incorporate real assets and alternative investments into a traditional portfolio of U.S. and international equity and fixed income ETFs,” according to the issuer.

Like other market participants, endowments are active in traditional asset classes such as stocks and bonds. Where emulating endowment becomes tricky for individual investors is on the alternatives front. Yes, that includes commodities, which are readily attainable for any investor, but endowments dive deeper into the alternatives universe, often embracing long-short strategies and hedging techniques. That jibes with the long-term (into perpetuity) time frame of endowment and their efforts to reduce portfolio risk.

“The primary investment objective of university endowment funds is to generate sufficient returns to maintain the purchasing power of their assets in perpetuity and sustain the university’s operating budget. In general, endowments target a real average annual return of 5% (adjusted for inflation) over the long term (five to 10 years),” according to Pictet Wealth Management.

The WisdomTree model portfolio solves the alternatives riddle in a variety of ways. There’s the the broad-based WisdomTree Enhanced Commodity Strategy Fund (GCC A), which is a straight-forward inflation-fighting tool, while the the WisdomTree CBOE S&P 500 PutWrite Strategy Fund (PUTW B+) and the First Trust North American Energy Infrastructure Fund (EMLP B-) elevate the model portfolio’s income profile.

Within the aggressive sleeve of this model portfolio, there’s a 30% allocation to alternatives, which meshes with the long-declining role of public equities in university endowments.

“Large US endowment funds’ allocation to public equities declined from 45% of total assets in 2002 to 30% in 2020 (having fallen to as low as 26% in 2009), while their allocation to alternative assets increased from 32% to 59% over the same period,” adds Pictet. “In 2020, the Yale endowment fund, the third largest in the US, said it aimed to have around three quarters of its assets allocated to alternative assets.”

Another interesting point about the WisdomTree model portfolio’s aggressive sleeve is that its alternatives allocation more closely resembles that of a large endowment. As Pictet notes, many smaller endowments tend to focus on more traditional assets, such as domestic and foreign equities and investment-grade bonds.

For more on how to implement model portfolios, visit our Model Portfolio Channel.

Loading Articles...
Help & Info
  • Contact Us
Tools
  • ETF Screener
  • ETF Analyzer
  • Mutual Fund to ETF Converter
  • Head-To-Head ETF Comparison
  • ETF Country Exposure Tool
  • ETF Stock Exposure Tool
  • ETF Performance Visualizer
  • ETF Database Model Portfolios
  • ETF Database Realtime Ratings
  • ETF Database Pro
More Tools
  • ETF Launch Center
  • Financial Advisor & RIA Center
  • ETF Database RSS Feed
Explore ETFs
  • ETF News
  • ETF Picks of the Month
  • ETF Category Reports
  • Premium Articles
  • Alphabetical Listing of ETFs
  • Best ETFs
  • Browse ETFs by ETF Database Category
  • Browse ETFs by Index
  • Browse ETFs by Issuer
  • Compare ETFs
Legal
  • Terms of Use and Privacy Policy
  • © 2023 VettaFi LLC. All rights reserved.
Follow ETF Database
Follow ETF Database

Advertisement

Is Your Portfolio Positioned With Enough Global Exposure?

ETF Education Channel

How to Allocate Commodities in Portfolios

Tom LydonApr 26, 2022
2022-04-26

A long-running debate in asset allocation circles is how much of a portfolio an investor should...

Core Strategies Channel

Why ETFs Experience Limit Up/Down Protections

Karrie GordonMay 13, 2022
2022-05-13

In a digital age where information moves in milliseconds and millions of participants can transact...

}
X