By Margaret Chen, head of CA Capital ManagementCambridge Associates

Margaret Chen
Margaret Chen
Humans gauge time through memorable events. Using this metric, 2016 was a relatively uneventful year for endowments—yet investors’ desire and impatience for change deepened as the year progressed. 2017 will see continued questions about the “endowment model” as institutions search for return, consider how the political environment may alter the investment environment, and whether there is a place for active management. 

Institutions should focus on the nuts and bolts of long-term investing and “play their own game,” by reaffirming their investment goals and portfolio parameters (volatility, liquidity, time horizon). While low interest rates persist, a portfolio needs to look different than the index in order to achieve many institutions’ goal of generating a 5% real return or superior returns over an index benchmark. Using active management to generate alpha and embracing diversification to....

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