Howard Hughes Medical Institute, Chevy Chase, Md., restructured its portfolio under the guidance of Nestor Santiago, the $12.5 billion endowment’s new chief investment officer. Mr. Santiago said he has divided the portfolio into "hedges” and "bets”; the larger bets arena comprises public and private equity and opportunistic strategies, while the hedges section includes Treasury inflation-protected securities, nominal U.S. Treasuries and absolute-return strategies.
Due to the overhaul, the endowment slashed fixed income to 18% of total assets from its 28% policy target, eliminating corporate bonds and mortgages; lowered U.S. equities to 28% from 30%; and added a separate emerging-markets equity allocation of 5%. Emerging markets comprised 3% of assets that were included in a 21% allocation to non-U.S. developed markets. In addition, the fund raised private equity to 14% of assets from a 9% policy target; increased absolute-return strategies to 10% from 6%; and pared real estate to 3% of assets from 6%.