Eighty-nine percent of endowments and foundations are worried about a possible trade war between the U.S. and China, with 78% expressing moderate concern and 11% very high concern, according to a survey released Monday by investment consulting firm NEPC.

These investors’ worries are not unexpected, as 91% reported having some form of investment in China in their portfolios.

Seventy-six percent said they invested in China through a broad emerging markets strategy, and 4% paired this approach with a dedicated China-only investment strategy, such as China A-Shares. An additional 9% said they had a China-focused private equity or private debt strategy.

“Headlines about a U.S.-China trade war may have lessened in recent weeks, but if tensions reignite, endowments and foundations will likely feel the impact in their portfolios,” Cathy Konicki, partner in NEPC’s endowment and foundation practice, said in a statement.

“Our survey results show that while investors recognize the impact geopolitics could have on their portfolios, they haven’t made drastic changes to their investment strategies in response.”

Konicki said NEPC recommended that endowments and foundations maintain focus on their long-term objectives despite the current unpredictable environment.

NEPC’s endowment and foundation practice conducted the survey online in April.

The survey also assessed endowments’ and foundations’ outlook on alternative investments. Seventy-three percent of respondents said they had more than 10% of their portfolios dedicated to alternative investments, and 42% had upward of 20% allocated to alternatives.

These investors had a clear perspective on which alternative investments are poised to benefit from the return of market volatility, according to NEPC. Half said hedge funds, 17% private equity, 13% commodities and 13% real estate or other real assets.

Hedge Fund Research reported earlier this month that its Fund Weighted Composite Index had advanced 0.39% in April, breaking a two-month losing streak, and bringing year-to-date performance to 0.38%.

“Hedge funds extended gains in April to begin the second quarter and also extended the YTD outperformance of most equity market indices, with support and contribution from energy and volatility exposures,” HFR’s president, Kenneth Heinz, said in a statement.

Focusing longer term, 59% of endowments and foundations in the NEPC survey said they expected private equity to generate the greatest return over the next three to five years, followed by 15% that said hedge funds would do so, 11% commodities and 9% real estate and real assets (9%).

In a survey question about the strength of the economy, 75% of respondents said they had not changed their portfolios because of recent market volatility, even though 81% believed greater volatility would persist.

Ninety-five percent expressed optimism about the economy, with 57% saying it was in a better place than this time in 2017, and 38% saying it was in the same place.

Indeed, respondents were even more optimistic than in early 2017, when 92% said the economy was in the same or better place.

Geopolitical tensions and political uncertainty are the biggest threat to endowments’ and foundations’ investments in the near term, according to 57% of respondents.

Another 11% said they were most concerned about rising interest rates, 9% said global inflation and 6% cited Federal Reserve actions, such as balance sheet adjustments.

— Check out Trade Wars and Protectionism Unsettle Institutional Investors on ThinkAdvisor.