Atlas Foundation Asset Allocation Strategy Review

Very Hard Institutional Portfolio Mgmt Foundations And Endowments

The Atlas Foundation is a well-established charitable organization with a focus on funding global health initiatives. Recently, the foundation’s investment committee initiated a review of its asset allocation strategy to enhance the risk-adjusted returns of its endowment portfolio. The foundation has traditionally maintained a conservative allocation with 60% in bonds and 40% in equities. However, due to the low-interest-rate environment and increasing demand for funding, the committee is considering increasing equity exposure while potentially introducing alternative investments, such as private equity and hedge funds.

The investment committee is particularly concerned about the impact of this change on the foundation's expected returns and its ability to meet ongoing funding obligations. They seek to ensure that their policy aligns with both their return objectives and their risk tolerance while considering the specific requirements and restrictions typical of nonprofit foundations.

Increasing the equity allocation to 70% while introducing 10% in private equity could yield a higher expected return, but increases volatility.

Maintaining the current 60% bonds and 40% equities allocation is preferred to reduce risk, despite its potential for underperformance.

A shift to a 50% equity and 50% alternative investment portfolio can enhance returns and maintain risk within acceptable levels.

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