Large endowments, admired for their asset allocation strategies and long-term approaches, are often touted as the ideal model for other endowments. However, as evidenced by the 2016 NACUBO Commonfund Study of Endowments, small and midsize endowments need to take a different approach or risk continuing to see negative returns.
Small and midsize endowments face a number of different challenges and needs from large endowments. Smaller endowments typically have higher turnover on investment committees, less internal resources and fewer assets for leverage. These endowments aim to minimize operational costs and not stretch resources too thin, while still generating long-term returns that don't take on too much risk.
Instead of rote following of the Yale model, smaller endowments should consider the following factors to meet their own unique challenges.