Investment Committee Allocation Decisions for Endowments

Medium Institutional Portfolio Mgmt Foundations And Endowments

The QRS Foundation is a mid-sized endowment managing a pool of assets valued at $250 million. The foundation primarily funds research initiatives in the field of renewable energy. Recently, the foundation's investment committee identified a need to adjust its portfolio in response to increasing inflation and market volatility. The committee is evaluating various changes in asset allocation to meet its long-term financial goals while sustaining its mission.

Given its unique mission and focus, the foundation has a specific spending policy that allows for a withdrawal of 4% of the average market value of the assets over the previous 12 quarters. As part of its overall strategy, the foundation aims to maintain a balanced risk profile while maximizing returns over the long term.

In light of these considerations, the investment committee is debating whether to increase its allocation to alternative investments in order to hedge against inflation and improve returns.

Increasing allocation to alternative investments will not significantly impact the expected returns due to their typically lower correlation with the general market.

A higher allocation to alternatives can provide a hedge against inflation and improve long-term performance, aligning with the foundation's goals.

Reducing portfolio volatility is less important for the foundation, as they primarily focus on maximizing short-term returns.

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