New endowment index provides independent benchmark for fiduciaries
Endowment Wealth Management, in collaboration with exchange-traded fund strategist ETF Model Solutions, has launched the Endowment Index, a benchmarking tool for investors in globally-diversified, multi-asset portfolios that include alternative investments.
The Endowment Index, calculated by Nasdaq OMX is an objective benchmark comprised of three major asset class building blocks: global equity, global fixed income, and alternatives which includes hedge funds, private equity and real assets.
The index is used for portfolio comparison, investment analysis, research and benchmarking purposes by fiduciaries such as trustees, portfolio managers, consultants and advisors to endowments, foundations, trusts, defined benefit/defined contribution plans, pension plans and individual investors.
The Endowment Index is a total return index and all underlying components are comprised of exchange-traded funds or other investable securities.
"The proliferation of exchange-traded products and mutual funds that offer alternative strategies in liquid form is leading to the increasing adoption by investors outside of the institutional endowment universe," says Prateek Mehrotra, chief investment officer of Endowment Wealth Management. "Until now, they've had to use a proxy or a custom benchmark for those portfolios. The Endowment Index now provides an appropriate benchmarking solution for investors that embrace the Endowment investment philosophy."
The use of alternatives has broadened beyond endowments. Recent studies by Barclays Prime Brokers estimates that use of liquid alternatives grew 43 per cent to USD137 billion in 2013, and that by 2018, assets in this space could stretch to between USD650 and USD950 billion.
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