BNY Mellon’s Asset Strategy View® examines a universe of 93 endowments and foundations using aggregated data to observe performance and asset allocation trends
New York – July 27, 2020 – BNY Mellon today announced new findings from its BNY Mellon Asset Strategy View®, a solution that leverages proprietary aggregated data to generate market intelligence about institutional investor allocation behavior. The report shows that both small and large endowments and foundations (E&Fs) saw returns drop as COVID-19 spread from a regional crisis to a global pandemic, with a (-10.46%) average by the end of the first quarter for all E&Fs. Smaller E&Fs underperformed their larger counterparts by (1.93%) given larger allocations to equity and fixed income as compared to larger E&Fs, which have significantly more exposure to alternative asset classes such as private equity and hedge funds.
“As we are still in the relatively early stages of the pandemic, it is difficult to assess the longer-term financial impacts on endowed institutions. Though they embrace a long term view to manage their finances and investments despite market fluctuations, the longer the crisis continues, the harder it will be for some institutions to support their spending needs and maintain the discipline they aspire to,” said Frances Barney, CFA, and Head of Global Risk Solutions, BNY Mellon Asset Servicing. “As a leading provider of performance and risk analytics solutions, we will continue to share information on investment performance and asset allocation trends to inform the dialogue with clients, who are dedicated to the long term success of their respective not-for-profits and their diverse missions.”
Prior to the COVID pandemic, BNY Mellon’s analysis of E&Fs in 2019 showed smaller institutions slightly outperformed larger institutions by 19 basis points. Overall, institutions with less than $1 billion in assets experienced strong annual returns of (15.11%) compared to those with more than $1 billion in assets at (14.92%). However, this trend was significantly reversed by the end of the first quarter of 2020, with differences in performance between larger and smaller E&Fs becoming more evident due to their divergent approaches to asset allocation. Within their alternative allocations, E&Fs with less than $1 billion in assets increased exposures to real estate, which increased (+28%) over the five-plus year period ending in Q1 2020, while decreasing holdings in private equity (-24%). In contrast, larger E&Fs increased exposure to high-performing private equity (+33%) and hedge fund (+2%) sub asset classes over the last five years, while exposure to real estate remained consistent and other real assets decreased (-4%).
Learn more about BNY Mellon Asset Strategy View®.
About BNY Mellon
BNY Mellon is a global investments company dedicated to helping its clients manage and service their financial assets throughout the investment lifecycle. Whether providing financial services for institutions, corporations or individual investors, BNY Mellon delivers informed investment and wealth management and investment services in 35 countries. As of June 30, 2020, BNY Mellon had $37.3 trillion in assets under custody and/or administration, and $2.0 trillion in assets under management. BNY Mellon can act as a single point of contact for clients looking to create, trade, hold, manage, service, distribute or restructure investments. BNY Mellon is the corporate brand of The Bank of New York Mellon Corporation (NYSE: BK). Additional information is available on www.bnymellon.com. Follow us on Twitter @BNYMellon or visit our newsroom at www.bnymellon.com/newsroom for the latest company news.
Media Contact
Paul Patella
+1 212 635 1378
paul.patella@bnymellon.com