Rates of returns for U.S. foundations averaged 8.1% in fiscal 2005, according to a report issued June 9 by the Commonfund Institute. That's lower than the past two years: Returns were 11.4% for 2004 and 17.8% for 2003, the report said.
Foundations also decreased their average domestic equity allocations to 37% in fiscal 2005 from 45% in 2004, while fixed income fell to an average 19% in 2005, compared with 20% the year before. However, the average international equity allocation rose to 18% from 14%, and alternative strategies to 20% from 18%.
"Foundations and operating charities expect to continue the trend of decreasing domestic equities and fixed income and increasing international equities, alternative strategies and cash/short-term investments," according to a news release.
48% to boost private equity
Forty-eight percent of private equity investors plan to increase their allocations in the next 12 months, up from 44% six months ago, according to Coller Capital's Summer 2006 Global Private Equity Barometer survey, scheduled to released June 12.
Some 53% plan to invest in additional funds within the next year, while 37% plan to keep the same number of funds and 10% plan to invest in fewer funds.
However, 64% of respondents said they declined to re-invest with some of their existing private equity fund managers, up from 56% six months ago.
Three-quarters of investors expect the number of portfolio companies taken private by private equity funds to increase over the next three years. Investors also ranked Asia-Pacific buyouts as the most attractive investment opportunity, replacing European buyouts, the most popular choice months ago.