PitchBook: Harvard sees record donations to endowment amid mounting expenses
NEPC’s Colin Hatton was recently quoted in this PitchBook article discussing the growing reliance on philanthropy to offset structural financial pressures, even for the most well-resourced institutions. Read the PitchBook article here.
During one of Harvard University’s most challenging years, donors helped fund the endowment, which in turn supported the university’s operations.
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“A lot of educational institutions are struggling with balancing their operating budgets, and you’re seeing a number that are running deficits. In some cases, they’re using the endowment to help bridge that deficit,” said Colin Hatton, a principal at NEPC, where he advises endowments and foundations.
Hatton said endowments’ mounting contributions to university operations, in addition to rising inflation expectations, has many of his clients planning to increase their returns in the coming year. NEPC, he said, recommends funds do this through strategic asset allocation decisions, particularly by prioritizing an equity-centric portfolio, allocations to private markets and fixed income exposure, including private debt.
S&P Global: US investors regain slight risk appetite for 1st time since July
NEPC’s Jennifer Appel was recently quoted in this S&P Global Market Intelligence article discussing the renewed risk appetite among U.S. investors and what it could signal for markets ahead. Read the full piece on S&P Global’s website.
US investors reported a renewed risk appetite for the first time since July, along with an optimistic outlook for near-term equity market performance not seen since January.
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“There has been a lot of optimism built into markets despite some of the concerns around elevated valuations or geopolitics, so markets have been able to look through the government shutdown due to some of the tailwinds that have driven markets since April, such as accelerated rate cut expectations,” Jennifer Appel, senior investment director at NEPC, said in an interview.
Although the shutdown could become one of the longest for the government, markets are focused less on its duration and more on its economic impact, which should be minimal, Appel said.
“When thinking about economic growth, inflation or monetary policy, it’s hard to say that we’re going to see the 2025 shutdown derailing some of those tenets of the current environment,” Appel said. “We would expect this to be a pretty short-lived event for the market even if the shutdown itself is lasting longer.”
Pensions & Investments: Another banner year for pension funds as public equities push returns higher
NEPC’s Margaret Belmondo spoke with Pensions & Investments about the strong performance of international equities and the factors driving their outperformance over the past fiscal year. Read the full article on P&I’s website to learn more about how public pension funds fared and the market forces behind their returns, or read excerpts below.
U.S. public pension funds chalked up a third straight year of positive returns for the fiscal year ended June 30, but unlike the prior two years, domestic equities was not the asset class that posted the highest returns.
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The big story of this past fiscal year was international equities.
“International equities had a standout year, delivering some of the strongest returns that we’ve seen in over a decade,” said Margaret Belmondo, partner and public fund team leader at investment consultant NEPC. “First, the U.S. dollar weakened significantly, down almost 10% (in the second half of the fiscal year), which was a meaningful tailwind for U.S.-based investors.”
For the year ended June 30, the Bloomberg U.S. Dollar Spot index returned 6.3%.
“Second, international markets are starting from a much more attractive valuation standpoint than the U.S., where large-cap growth stocks are highly concentrated and expensive, so that helped some of the flows going into international markets,” Belmondo said.
Click here to continue reading the full Pensions & Investments article.
Institutional Investor: Consultants Like Cliffwater Drop Institutional Mandates for Retail Opportunities
NEPC’s Chief Investment Officer, Tim McCusker, is quoted in Institutional Investor’s coverage of how experienced asset managers are adapting strategies and exploring ETFs. Read the full article on Institutional Investor’s website or read excerpts below.
Just as asset managers are moving to more user-friendly vehicles like ETFs, investment consulting firms like Cliffwater are pivoting to the retail and wealth space with an eye toward private assets.
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The other options consultants are taking to evolve in the current environment are to either go the OCIO route or partner with an established wealth manager — which NEPC did when it merged with Hightower last year.
“The institutional world has been under a lot of pressure for over a decade, and not just investment consulting,” NEPC’s chief investment officer Tim McCusker told II in September. “Everything except private markets has had a really tough time. And so those businesses, all different kinds, are looking for ways to grow.”
For NEPC, the main engine of growth for the last 10 years has been OCIO, going from zero 13 years ago to accounting for 30 percent of its revenue now. “And that will continue to grow for us,” McCusker said.
According to the NEPC investment chief, the institutional world has reached a plateau, where allocators have established their private market allocations, leaving only replacement growth. So, with long-term targets set in the institutional world, McCusker said that many advisors and managers are seeing the wealth market as “a place where we can serve and bring our advice.”
“I think the wealth market will be much better served having that than having advisors trying to advise their clients and do research at the same time,” McCusker added.
“Everyone in the space is looking at the wealth market and saying, ‘This is a place where we can serve and bring our advice.’”
Click here to read the full article on the Institutional Investor site.
Institutional Investor: More Seasoned Asset Managers Pivot to ETFs as Institutional Opportunities Thin Out
NEPC’s CIO Tim McCusker is quoted in this Institutional Investor piece on how longstanding asset managers are pivoting toward ETFs amid diminishing institutional mandates. Read the full article on Institutional Investor to explore the implications of this shift.
A little over a year ago, the $18.5 billion Westwood Holdings Group entered the exchange-traded-funds business for the first time, with the launch of two active, energy-focused funds. Since then, the Dallas-based asset and wealth manager has expanded its lineup to 16 actively managed ETFs, now totaling nearly $200 million in assets.
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As opportunities in institutional dwindle, more asset managers are pivoting to retail. “The institutional world has been under a lot of pressure for over a decade,” said NEPC’s Chief Investment Officer Tim McCusker. “Broader investment management fee pressure, the lack of alpha generation, everything except private markets has had a really tough time.”
Click here to read the full article on the Institutional Investor site.
MarketWatch: The Fed’s first rate cut in 2025 is here. How investors can position their stock portfolios to benefit.
NEPC’s Phillip Nelson was recently quoted in MarketWatch’s coverage of the Federal Reserve’s first rate cut of 2025, sharing insights on how investors can position their portfolios in response. Visit MarketWatch to read the full article.
The countdown is almost over. In a few hours, the Federal Reserve will announce whether it’s finally ready to lower interest rates for the first time in nearly a year, potentially ending a long pause in monetary policy that could steer growth, inflation and financial conditions in the world’s largest economy.
But for financial-market investors, the biggest question is how markets will react once the easing cycle resumes and, more importantly, what it means for their investment portfolios.
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“At least for the last month, the stock market has clearly been buying the rumor of what the Fed is going to do, that a cut will start in September and how many more cuts we will get for the rest of the year, so I don’t think there’s that much exuberance that we’re going to get from anything the Fed does on Wednesday,” said Phillip Nelson, partner and head of asset allocation at NEPC.
“Investors don’t need to make a lot of changes regarding portfolio positioning since we are still waiting for some clarity from the Fed, or for the economy to give a clear indication of the direction it is moving in,” Nelson told MarketWatch in a phone interview on Tuesday.
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“The economic projections from the Fed on Wednesday will give a little more color than they otherwise would in terms of the direction that we might see for small caps,” Nelson said. “But it’s still a tough environment where there are only five to 10 stocks in the U.S. that are really driving the market, so small caps may have to wait in the shadows for a bit longer to have their day, and I don’t see that turning too quickly,” he added.
Click here to continue reading the full MarketWatch article.
WSJ Pro Private Equity Report: Secondary Fundraising Stays Strong in 2025
NEPC’s Josh Beers was recently quoted in The Wall Street Journal’s Pro Private Equity report on the rapid growth of secondary fundraising, where he discussed how larger funds give firms greater flexibility and deal-making power. Visit The WSJ Pro Private Equity Report to read the full article.
Secondary fundraising remains robust in 2025 with many established firms raising much larger capital pools than they did in the past and newcomers making a mark with sizable debut funds.
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Larger funds can give firms more flexibility to pursue bigger deals and the firepower to lead such deals, according to Joshua Beers, a partner at investment consultant NEPC, which advises institutional investors on their portfolios.
“Having a sizable pool of capital puts you in an advantageous position,” he said.
Click here to continue reading the full WSJ Pro Private Equity Report article.
Planadviser: Rapid Growth in CITs Fueled by Small Plan Adoption
NEPC’s Bill Ryan is quoted in this PLANADVISER article discussing the rapid growth of collective investment trusts (CITs)—particularly how small plan adoption is fueling their rise—and why lower fees are a key driver. Visit PLANADVISER to read the full article.
Collective investment trusts now hold nearly 30% of DC plan assets, rising from just 13% a decade ago; experts predict it won’t be long before they overtake mutual funds’ role in the defined contribution market.
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“There are [several] macro factors driving [CIT] adoption,” says Bill Ryan, a partner and defined contribution team leader at NEPC. “No. 1 is lower fees for CITs relative to [fees for] mutual funds.”
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“For a while, mutual fund companies either didn’t have a CIT to provide to small plans, or priced it in a way that you had to have over a certain asset level to access CITs—so that CITs didn’t cannibalize their mutual fund business,” Ryan explains.
He adds that asset managers now prefer CITs because there are fewer cost burdens and less friction associated with the structure. That’s why small plans are catching on, he says.
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Usually, however, problems such as a recordkeeper lacking the right subscription documents for a new CIT or share class can slow down the transition process by “weeks, not months or years,” Ryan says.
“If there was a wrinkle, … it’s akin to what mega plans had 15 or 20 years ago,” he says. “It’s new, it’s different, so you just need to explain that you’re getting the same stocks in both portfolios … you’re just getting different wrapping paper.”
Click here to continue reading the full PLANADVISER article.
Planadviser: The Evolution of the DCIO Sales Model
NEPC’s Bill Ryan is featured in this PLANADVISER article, which explores how DCIO firms are shifting their sales models to focus more on centralized relationships with CIOs and home office decision-makers. Visit PLANADVISER to read the full article.
Investment firms are increasing emphasis on developing relationships with CIOs and others responsible for approved fund lists and 3(38) programs.
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Bill Ryan, a partner in, and DC team leader at, NEPC, says DCIO sales teams seem to have a greater appetite to be creative for the end client because of the centralization.
“There becomes more of a focal point for them to figure out what the scale and leverage [are] versus wider distribution, where you’re more tethered to the off-the-shelf products,” Ryan says. “[The centralization] allows the RIAs and institutional consultants to be more creative with their clients and [devise] maybe more bespoke solutions that they can scale for their client base.”
DCIOs that are successful have a centralized enterprise relationship manager who works with clients’ home office, he adds.
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Ryan says there could be hyper-consolidation among the DCIO firms, with some deciding to retreat from the DCIO space and concentrate on the wealth channel and annual rollovers. But the state of the industry now poses an opportunity for the DCIO sales teams.
“There is an urgency now that I haven’t seen before with the centralized decisionmakers that you can actually effect change,” Ryan says. “I think there’s going to be a tipping point—I don’t know if it’s two or three or five years from now—but the door could close. This is a really exciting window for entrepreneurs in the DCIO sales force to deliver interesting products to DC plans.”
Click here to continue reading the full PLANADVISER article.
PlanSponsor: CITs Expand, Go Smaller
NEPC’s Bill Ryan recently spoke with PLANSPONSOR about the growing adoption of Collective Investment Trusts (CITs), noting how fee transparency and evolving plan design are driving greater accessibility for smaller plans. Read the full article on PLANSPONSOR or read excerpts below.
The retirement security of millions of working Americans is becoming increasingly reliant upon an asset structure that is likely less familiar than its ubiquitous counterpart, but powerful to many.
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“There are [several] macro factors driving [CIT] adoption,” says Bill Ryan, partner and defined contribution team leader at NEPC. “Number one is lower fees for CITs relative to mutual funds.”
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“For a while, mutual fund companies either didn’t have a CIT to provide to small plans, or priced it in a way that you had to have over a certain asset level to access CITs—so that CITs didn’t cannibalize their mutual fund business,” explains NEPC’s Ryan.
He adds that asset managers now prefer CITs because there is less friction and fewer cost burdens associated with the structure. That is why small plans are catching on, he says.
. . .
NEPC’s Ryan adds that usually, however, problems such as a recordkeeper not having the right subscription documents for a new CIT or share class can result in the slowing down the transition process by “weeks, not months or years.”
“If there was a wrinkle … it’s akin to what mega plans had 15 or 20 years ago,” says Ryan. “It’s new, it’s different, so you just need to explain that you’re getting the same stocks in both portfolios … you’re just getting different wrapping paper.”
Click here to read the full article on the PlanSponsor site.