IS A DIVERSIFIED PORTFOLIO BETTER THAN A 60/40 PORTFOLIO? A 10-YEAR COMPARISON STUDY OF A UNIVERSITY ENDOWMENT

Barbara von Brandt and Lucien R. Costley

Global Journal of Business Research, 2023, vol. 17, issue 1, 135-143

Abstract: The following examines the performance of an actively managed university endowment and compares the result to the return of a passive, index-based investment comprised of 60 % U.S. equities and 40 % U.S. bonds. From 2013 to 2022, the results show that the endowment underperformed the passive 60/40 index fund in each of the last 1-, 3-, 5-, and 10-year periods. The compound annualized growth rate (CAGR) over the 10-year period was 6.5% for the actively managed endowment compared to 7.8% for the 60/40 index fund. Incorporating novel asset classes into an actively managed portfolio does not guarantee better returns than investing in a low-cost 60/40 index fund.

Keywords: Endowment Management; Active Versus Passive Investing; Asset Allocation; ETFs (search for similar items in EconPapers)
JEL-codes: G3 (search for similar items in EconPapers)
Date: 2023
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Persistent link: https://EconPapers.repec.org/RePEc:ibf:gjbres:v:17:y:2023:i:1:p:135-143

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