Best of Bloomberg Intelligence (07/07/2022)

The video discusses the increased reliance of US endowments on private equity and alternative assets, highlighting the shift from a traditional 60/40 portfolio. It examines the performance of these assets, noting significant declines in venture capital and buyout indices. The discussion includes how some endowments, like Washington University, have benefited from private equity, while others, such as Harvard, have adopted more conservative strategies. The video concludes with the challenges facing private equity, including the narrowing illiquidity premium and rising leverage costs.

What significant change has occurred in the composition of endowment portfolios over the last decade?

• Increased allocation to traditional stocks

• Shift from private equity to bonds

• Growth in alternative assets from 19% to 35%

• Reduction in real estate investments

Which university had a 50% allocation to private equity and performed well last year?

• Harvard University

• Washington University

• University of Chicago

• University of Virginia

How has Harvard University adjusted its endowment strategy recently?

• Increased investment in real estate

• Shifted towards low duration hedge funds and cash

• Focused more on technology stocks

• Increased allocation to international markets

What is a major challenge for private equity firms in the current economic environment?

• Rising costs of leverage

• Increased competition from public markets

• Decreasing demand for private equity

• Lack of investment opportunities

What was the original promise of private equity according to consultants?

• To increase liquidity in portfolios

• To eliminate the need for traditional investments

• To reduce portfolio volatility and improve Sharpe ratio

• To guarantee high returns regardless of market conditions