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.
Endowments, foundations think coronavirus recession will rival financial crisis
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.