University Endowment Committees, Modern Portfolio Theory and Performance

Mimi Lord
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Mimi Lord: Weatherhead School of Management, Case Western Reserve University, Cleveland, OH 44106, USA

JRFM, 2020, vol. 13, issue 9, 1-22

Abstract: University endowments with broad portfolio diversification have been correlated with performance, but committees’ decision-making process has received relatively little attention. This study is unique in postulating that the committee’s learning commitment and open-mindedness are significant contributors to a decision process that is based on the principles of Modern Portfolio Theory (or, simply, Portfolio Theory). The use of Portfolio Theory as a decision-making framework leads to greater portfolio diversification, which, in turn, leads to higher risk-adjusted returns. This study also demonstrates that greater committee expertise across multiple asset classes contributes to more diversified portfolios.

Keywords: portfolio theory; portfolio diversification; open-mindedness; learning commitment; investment performance; decision process; group norms; diversity of expertise (search for similar items in EconPapers)
JEL-codes: C E F2 F3 G (search for similar items in EconPapers)
Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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