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The assumption is that user has little time to do research and is willing to copy another investor. Are any of the endowment funds publicly disclosing their trades?

userMai
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    There is absolutely NO DATA to support that managed funds or portfolios do better than basic index funds. Quite on the contrary: 90%+ of all managed mutual funds can't even beat the S&P500 and chances are the remaining 10% just got lucky. The basic strategy of "broad diversification + low cost index funds" is the best (and cheapest) choice for almost all individual investors. You can't beat the market. People who get paid millions of dollars to beat the market can't beat the market either. So just go with the market. – Hilmar Nov 03 '22 at 17:42
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    @Hilmar Well said, fellow Boglehead. The main people who argue that actively managed funds are expected to outperform the market are active fund managers. – Neil G Nov 03 '22 at 20:00
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    Yep. If you could, actually, beat the market then you'd just raise the fees you charge until eventually the net returns come back in line with what everyone else is getting. See eg the RenTech Medallian Fund, which is up to about 5% annual fees and 50% of profits. – Kaz Nov 03 '22 at 23:54
  • @Hilmar If you look at a five-year history of funds (so look at the funds that currently exist and existed five years ago), most of them are above the S&P 500. Which sounds like "evidence" to people who aren't familiar with subtleties of logic. – Acccumulation Nov 06 '22 at 01:11
  • @Kaz It's not about how much you're beating the market by, it's how much you can convince your clients you're beating the market by. – Acccumulation Nov 06 '22 at 01:20

4 Answers4

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The assumption is that user has little time to do research and is willing to copy another investor. Are any of the endowment funds publicly disclosing their trades?

Lets say there is enough detail in the required information that they have to file. There are a couple of issues:

  • The timing. If they decide to make a change today, there will be a lag before it shows up in their filings. It could be weeks or months between the change and the filing submission.
  • Goals. Do the goals of the endowment fund match yours. People invest for a lot of reasons. They invest a college fund, they invest for retirement. The endowment fund needs to meet their goals regarding preservation of wealth, and using some of the dividends and interest to fund current needs.

Most people when faced with deciding which funds to invest in pick a low cost index fund or ETF. They may even decide to go a slightly more expensive route and pick a lifecycle fund, that will change the mix of stocks and bonds over time.

mhoran_psprep
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Universities are moving huge piles of money around, and as a result have access to investments that just aren't available to individual investors. (You can't afford to risk $100k in venture capital, probably, as one example.)

So, no you really can't replicate what they're doing.

keshlam
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    They also occasionally make very expensive mistakes, e.g.: Bernie Madoff's investment clients. – littleadv Nov 03 '22 at 03:06
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    Which is sorta the point. With that much to invest, it becomes reasonable to put some into high-risk/high-return investments. Most individuals can't afford to take that much risk with any substantial amount. – keshlam Nov 03 '22 at 22:22
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Endowment manager here.

Aim lower.

When people think about modeling endowments, they tend to have a blind side. They laser-focus on the biggest and most famous endowments such as Harvard's.

Don't. These endowments do things that are nuts by mortal standards. CalPERS is infamous for doing hostile takeovers and other Gordon Gekko style market manipulations. The big multi-billion-dollar endowments do similar "600 pound gorilla" things. You don't want to be in there echoing their stock movements.

But...

Meanwhile, you have hundreds of thousands of smaller endowments that just plug along with very simple, rational, and largely automated investing. And it works. Honestly their favorite asset is the index fund.

You can find a nonprofit that has an endowment and a membership organizational structure. Then you can join it, and simply ask management how the endowment is invested. It's your right as a member to know.

Harper - Reinstate Monica
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    Excellent advice. Low-fee index funds aren't exciting, but YOU DON'T WANT EXCITING. There are lots of articles out there suggesting good standard mixtures of large cap, small cap, bond, and sometimes international and real estate industry; which mix is best for you depends on when you're going to need the money and what your tolerance for risk is. Then just rebalance occasionally to maintain that mixture -- and by occasionally I mean looking at it a couple times a year is probably plenty -- and let it do what it's going to do. Almost painless and effective. – keshlam Nov 04 '22 at 14:11
  • Warning: if you're going into the market, you must have the self control to stick with your strategy and not panic when value drops for a while or get overexcited during a bubble. Until you are actually taking the money back out, it doesn't matter that much; just rebalance. Don't try to "time the market"; nobody's good at that. And remember that when things are down, investing the same amount of money buys you more shares. This is why time horizon matters -- the longer you can wait, the more the short-term swings average out and Market Rate Of Return dominates. – keshlam Nov 04 '22 at 14:18
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    @keshlam absolutely. Endowment managers have nerves of steel. They will stay in the investments, but they will also pull their "presumed to be prudent" 4-7% out of the endowment even while it's in free-fall. In 2009 that was made legal - heck it's mandatory! Old law, when the endowment went below donated value, you couldn't use it... sorry soup kitchen, no soup for you, right when we're in a recession and the need is greatest! Anyway yeah... when stocks go down we're buying them to re-balance the portfolio! – Harper - Reinstate Monica Nov 04 '22 at 17:55
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In principle you could, but it is unlikely. Here are a few obstacles:

  1. I'm not sure your could get access to their portfolio composition. The endowment I used to work with did not make their portfolio public and they were a public university. I have never seen one publicly disclosed (but they might be out there).

  2. To get access to things like private equity and hedge funds you need to be a qualified investor. This means at least $5m in liquid assets. Common stock trades will not replicate some of these types of investments. And some of these funds may no longer be open to investors.

  3. To source the kinds of more exotic exposures endowments can have you need to establish relationships with big banks (Goldman Sachs, JP Morgan, etc.). To do this you most likely need to open a family office which does not make sense unless you have at least $40-50m.

Assuming you get past all of this, they yes you can just go to your bank contacts and ask them to help you replicate the endowment's portfolio.

Wintermute
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