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Posts Tagged ‘ staglfation ’

Endowments Should Prepare for Risks of Deflation

Apr 4th, 2012 | Filed under: Institutional Investing, Alpha Strategies, Risk management, Endowments & Foundations

Traditionally, the endowment model has involved holding illiquid assets, and benefitting from the premiums that markets pay institutions with a tolerance for illiquidity. Further, this self-image of endowments as buy-and-hold institutions leads to a de-emphasis of risk management, in the expectation that near term zigs and zags will level out nicely if given enough time. Mark Schmid and Que Nguyen, both of the University of Chicago, break with this model in a recent paper. They say, “While we continue to pursue strong returns, we must do so without taking on excessive risk to the University."Read More