Foundation and endowment investment officers were less concerned about a slowdown in global growth though it remained their greatest threat to investments, a quarterly NEPC survey said, while potential overseas conflicts are now on their radar.
Forty-five percent of survey respondents feel a slowdown in global growth is the greatest threat to their investment programs in the near term, down from 50% the previous quarter, which itself was down from 60% in the fourth quarter of 2013, survey results from the investment consultant released on Monday show.
“(The results) told me they were comfortable with the pace of global growth,” said Kristin M. Reynolds, partner, endowment and foundation consulting practice, in a telephone interview. “While they didn’t think (growth) was increasing, they did think it was enough to sustain their investment programs.”
The next greatest threat is rising interest rates, according to 20% of respondents, up from 19% the previous quarter. Following that is potential overseas conflict, with 12% of respondents saying it is the greatest threat. No respondents said overseas conflict was a threat the previous quarter.
Meanwhile, the threat of Federal Reserve tapering or U.S. budget deficit seems to be receding in the minds of foundations and endowment officials. In the fourth quarter survey, 33% of respondents cited that as the greatest threat, which fell to 15% in the first quarter and further dropped to 10% in the second quarter.Fifty-six percent of respondents to NEPC’s survey feel the U.S. economy is in a better place than it was a year ago, down from 75% the previous quarter, while 40% feel the economy is in the same place and 4% believe the U.S. economy is in a worse place than a year ago.
The survey also concentrated on hedge fund exposure, with 65% of respondents saying their hedge fund exposure was greater than 10% of their overall portfolios. Implementation was relatively evenly distributed, with 35% saying they make solely direct investments, 35% saying they use a combination of direct investments and hedge fund of funds, and 29% use only funds of funds.
Forty-nine foundation and endowment investment officials responded to the survey between June 18 and July 11.