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Endowments and Foundations

NEPC: Endowments, foundations concerned about trade war, but optimistic on U.S. economy

The potential for a trade war with China and other events affecting the global economy were a top concern for endowment and foundation investment officials, according to a survey released Tuesday by NEPC.

Among the 47 officials surveyed, 91% had some exposure to China and 89% were concerned about a trade war with the country.

For 57% of respondents, geopolitical tensions and political uncertainty were cited as the greatest near-term threats to investments.

Survey respondents were more optimistic about the U.S. economy, with 90% saying it is the same or in a better place than a year ago and 75% not reporting portfolio changes because of recent market volatility.

The 57% of respondents concerned about geopolitical tensions and political uncertainty is higher than the 37% reported last year by a different group of survey respondents. In the latest survey, "one of the interesting things is that even though there is concern about geopolitical events, on the flip side investors are not doing anything with their portfolios to be able to mitigate their concerns. They're really keeping their portfolios at the status quo," said Cathy Konicki, partner in NEPC's endowment and foundation practice, in an interview. "You still need to take a long-term perspective."

The survey also asked endowments and foundations about alternative investments such as hedge funds, private equity and private debt in the current environment. Among respondents, 42% have more than 20% allocated to alternatives and 73% have more than 10%.

For 59% of officials, private equity is expected to be the top performer over the next three to five years, followed by hedge funds (15%), commodities (11%), real estate and real assets (9%), and other, including private debt and renewable energy (6%).