Pensions & Investments published a feature article on the Fall 2019 Endowments and Foundations Survey results. You can read the article on P&I’s site here. 

Investment officials at endowments and foundations are still optimistic about China and the global economy, and not too worried about a recession, according to a survey released Thursday by NEPC’s endowments and foundations practice group.

Thoughtful investors are talking about geopolitical tensions, said Samuel J. Pollack, principal and senior consultant, in a statement, but “alarm bells in the media aren’t translating into significant portfolio changes for organizations with a focus on the long term.”

The NEPC survey found that 79% of respondents have investment exposure to China, largely through a broad emerging markets strategy. And despite concerns that include U.S.-China trade tensions, corporate governance issues and weak investor protections, declining economic growth and growing debt levels there, 80% have no plans to change their exposure to China.

Only 14% of respondents worry about a recession within the next two years, and 11% consider recession fears overblown, while 74% believe the market can still deliver sizable returns in the short term.

Still, 46% of respondents see a slowdown in economic growth as the greatest threat to their short-term investment performance, and 23% worry about political uncertainty.

The use of hedge funds to manage risk is still common for endowments and foundations, with 86% maintaining some exposure, and 48% holding more than 10%. But 47% have decreased their exposure in the past year and 21% plan to do so next year.

For these hedge fund investors, NEPC found the greatest pain points to be high fees, according to 25% of respondents, while 18% cited and limited liquidity and transparency. Respondents also indicated a shift to specialist hedge funds from generalist hedge funds, with the top three strategies being long/short equity, global macro discretionary and multistrategy funds.