Endowment Multi-Asset Risk-Based ETF Models

The Endowment multi-asset risk-based ETF models are 3 highly diversified strategic asset allocation models that implement the Endowment Investment PhilosophyTM, a long-term strategic approach to investing pioneered by large university endowment fund managers.  The models are offered with 3 primary investor risk-classifications: Conservative, Moderate, Aggressive.

The Moderate Model employs an index-based approach utilizing data collected from over 800 college and university endowment funds, targeting the same holdings and index weightings contained within the Endowment IndexTM. The Conservative and Aggressive models are comprised of identical holdings as the Moderate model, however, the weightings among the equity, fixed income and alternative holdings are adjusted accordingly.

There are 19 asset class and sub-asset class indexes held within each model. The underlying individual securities within those models contain international and emerging market fixed income and equity securities, along with alternative strategies, such as hedge funds, private equity and real assets (commodities, precious metals, real estate, infrastructure and other hard assets). There are more than 30,000 individual securities held within the 19 indexes in each model.

These strategic models are intended as a globally-diversified core holdings for participant accounts, and could be considered as an alternative to traditional balanced or target date funds. They can also be used in individual client accounts in an SMA or UMA format.

Six Reasons To Consider Adding the Endowment Risk-Based Models:

  1. Utilize the Endowment Investment PhilosophyTMThe models use the Endowment Investment PhilosophyTM, which integrates a third major asset class (Alternatives/Risk Managed) with a historical two-dimensional Global Equity and Global Fixed Income portfolio seeking to deliver improved risk-adjusted returns while reducing overall portfolio volatility to help plan participants remain committed to their long-term investment goals and create sustainable wealth.
  2. Expanded Global Diversification:The models provide a 3-dimensional allocation that include ETF indices comprised of over 30,000+ individual securities.
  3. Lowers the Cost of Investing:The models utilize ETFs and a strategic allocation investment approach that minimizes trading activity in an effort to reduce overall investment costs relative to actively managed mutual funds.
  4. Reduced Interest Rate Risk Exposure:The models seek to reduce interest rate risk when compared to portfolios with greater bond allocations.  After a 30+ year secular bull market in core bonds, participants in portfolios with higher bond allocations, such as many “target date”, “60-40”, and balanced funds, may be over-allocated to core fixed income, leaving participant portfolios vulnerable to significant future interest rate risk should rates rise in the next 30+ years.
  5. Hedge Inflation Risk:The Endowment risk-based ETF models seek to reduce the potential threat of inflation, which can erode the purchasing power of participant portfolios, by incorporating real assets, such as real estate, precious metals, commodities, infrastructure and others into the portfolio to seek to protect the purchasing power of clients’ savings.
  6. Improve Client Satisfaction:The models enable advisors to provide a single investment selection designed to address a broad range of goals and investor concerns.

University endowments, defined contribution, and pension plans have targeted alternative investments in an effort to improve diversification, reduce their risk, provide inflation protection, and to generally improve their risk adjusted returns. Historically, advisors and individual investors have relied upon a more limited menu of investment selections that included primarily domestic stocks and bonds. ETF Model SolutionsTM Risk-based models provide you with the opportunity and the  to consider investment options that are more relevant to a global economy and changing capital markets. Endowment Multi-Asset ETF Allocation models embody this objective.

To download Fact Sheets for the Endowment Risk-based models, including descriptions and historical performance, enter your email address.  Wait for the pop-up message to appear that confirms your validated email address, then be sure to CLICK “Continue”.

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To learn more, contact Tim Landolt, MBA, Managing Director. 

Tim@ETFModelSolutions.com or 920.785.6012.