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May 29, 2018 at 02:03 PM
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.
