Endowments, foundations think coronavirus recession will rival financial crisis

Endowments and foundations believe the COVID-19 crisis will lead to a severe recession similar to the global financial crisis of 2008, a new survey from investment consultant NEPC showed.

Among the 105 investment professionals at endowments and foundations surveyed by NEPC in late March, 54.5% expect a similar recession, while 41.4% expect a short, sharp recession followed by a strong recovery, and 4.1% expect a "self-reinforcing depression."

When asked what actions they are taking in their portfolio during the current market volatility, 44.4% said they are rebalancing "toward" policy targets while 16.2% say they are rebalancing "to" their policy targets, 14.1% says they are raising additional cash and 13.1% are reducing their overall risk exposure.

Also, 7.1% of respondents say they are not taking any actions, and 5.1% say they are reducing private market commitments.

When asked what other changes they are making or considering making as a result of the market volatility, a total of 60.6% responded they would reduce costs and expenses or reduce their spending rate, while 16.2% said they will tap credit markets to address short-term capital requirements, 12.1% said they will redirect grants to address the challenges of the current crisis, and 11.1% said they will increase their spending rate to support operations.