In recent years, the “endowment model” of investing has been seen as the “gold standard” of institutional investment practice. In practice, few institutional allocators have the resources and access required to invest in the same way as the largest university endowments. Moreover, in recent years, the investment returns that the leading endowments have achieved are not higher than outcomes available from much simpler, liquid and transparent portfolios, leading some to question whether the ongoing surge of assets toward this investment style is impairing its potency. At Atlas, we believe we can generate returns competitive to endowment model outcomes with a much more cost-effective, liquid and understandable investment strategy.
The “endowment model” philosophy boils down to two primary characteristics:
- Heavy reliance on two return sources: equity beta and illiquidity
- Strong focus on external manager access and selection