Endowment and foundation investment officers are worried that slowing of global growth will negatively affect their fund's investment performance, but they are upbeat about the prospects for the U.S. economy.
Three-quarters of NEPC's endowment and foundation clients said they think the U.S. economy was in a “better place” as of March 31 than it was at the same time last year, according to the results of a survey released by the investment consultant on Monday.
None of NEPC's endowment/foundation clients said they thought the U.S. economy was worse now than it was a year ago, while the remainder of investment officers surveyed in April said the economy was the same as it was on March 31, 2013.
Exactly half of NEPC's clients said they think a global slowdown is their fund's biggest risk, followed by 19% who said rising interest rates are the worst threat, and 13% of respondents who were worried about the effect of the Federal Reserve's tapering program.
About 55% of those surveyed said they expect a return of between 6% and 10% for the S&P 500 index in 2014, while 31% predicted a return between zero and 5% for the year, followed by 12% who think the index return will top 10%. Just 2% of those who answered NEPC's question think the S&P 500 index will dip into negative terrain.
“Overall confidence is reflected in more than half of endowments and foundations polled (55%) saying the markets will show high single-digit returns,” said Cathy Konicki, partner and head of NEPC's endowment and foundation practice, in a company news release.
Confidence notwithstanding, 43% of NEPC's endowment/foundation clients said they have decreased their fund's equity exposure after the big run-up in equities in 2013. Only 4% of respondents said they've increased their equity allocation in 2014, while a slight majority — 53% — said they haven't changed how much they have invested in equities.