Spend rates are up, often beyond realistic expectations for real returns. Much has been written of lower expected returns going forward compared to the high market returns over the past five years, but what hasn't been written is that these data points have created a precarious situation for endowments and the organizations they support. The 2015 NACUBO-Commonfund Study of Endowments found that up to 78% of institutions increased endowment spending each year since fiscal year 2010.
If real returns for most portfolios are unlikely to meet these increased spending goals, what should endowments do to adjust to this new market reality?
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