Endowments and foundations are turning to private markets and emerging markets as they prep for the eventual end to the long-running U.S. bull market, according to consultants and investment professionals.
For 2018, 43% of endowments and foundations are preparing to boost their allocations to private equity and private debt, while 40% will slash their domestic equity portfolios, according to NEPC’s Q1 2018 endowment and foundation survey.
Forty-five percent of the endowments and foundations surveyed believe that emerging markets equity will be the strongest performing asset class for 2018, according to the survey.
The interest in the asset classes stems from attractive valuations and return potentials, according to Scott Perry, a partner and member of NEPC’s endowment and foundation consulting practice.
Endowments are putting “more capital to work in [emerging and developed areas] and are now using domestic equity as a funding source for those additional allocations,” he says.