Endowments and foundations have diversified their investments into a variety of asset classes, but many of these institutional investors still face governance and management challenges, especially around alternatives. Basic questions include whether to outsource to better manage risk and whether to also pursue return objectives.
Towers Watson has found that many endowment and foundation committees may focus too much time on manager selection when it may be more prudent to look at more strategic investment issues, including asset allocation, spending policy, liquidity policy and investment committee design. The use of delegated investment services, or outsourcing, is an increasingly popular way to gain superior investment expertise in manager selection while making more effective use of in-house staff and resources. Delegation/outsourcing should be structured to meet the needs and in-house capabilities of your specific endowment/foundation. For example, outsourcing might involve the delegation of some or all alternative assets while focusing in-house resources on other components of the portfolio.
Why Towers Watson
We offer a range of investment consulting services, drawing on our position as a leading advisor to many of the world’s largest funds. Our capabilities include:
- Investment committee support on a variety of issues, including governance
- Tailored portfolio construction, considering various risk premiums
- Deep research on a variety of investment areas such as spending policy, asset allocation, liquidity policy, alternative betas and sustainability
- A flexible spectrum of delegated investment services