Press

“If I need cash, I’m probably going to sell out parts of my U.S. equity portfolio, because it’s had such a great run. Interest rates are high, which means that I’m getting good yields from my fixed income portfolio.” — Jeff Schwartz, President at MPI.

FundFire’s top headline today Ivy Endowments Face Liquidity Constraints amid PE Slump — features Jeff’s comments and MPI’s latest research A Private Equity Liquidity Squeeze By Any Other Name. Sabiq Shahidullah’s story covers a lot of important concepts in endowment investing and private markets; check it out if you’re a subscriber.

In “Points of Return” this week, Bloomberg Opinion’s Richard Annerquaye Abbey and John Authers featured a comprehensive discussion of pensions investing based on our FY2024 return estimates for the largest U.S. public pensions: Magnificent Seven: Don’t Dismiss the Correction Too Much – Bloomberg
“Unlike mutual funds, it’s impossible to have anything close to a real-time measure of the performance of the big public pension funds based on their holdings, no matter how tempting the idea may be. While we wait [for pensions to publish their fiscal year performance], an analysis by Markov Processes International using its proprietary model to project the performance of public pension funds managing more than $20 billion in the year from July 2023 to June 2024, came to one conclusion — funds with higher allocation in US equities are poised to outperform. No other asset comes close.”

Always an honor to have our work featured atop Institutional Investor‘s daily “The Essential” newsletter: Stocks Drove Pension Performance — Again. Solid context going beyond the patterns of the past couple years in Alicia McElhaney’s story on our projections of the largest public pensions’ returns for fiscal 2024.

See our press release here: Corporate News | Markov Processes International

“Given endowments’ high allocations to private equity, ‘there looks to be more artful navigating ahead,’ Markov said in its study. The schools may need to come up with other sources of cash to cover future spending needs, as private equity hasn’t been returning as much money to investors as expected.

Endowments may need to rely more on their liquid holdings of public stocks and bonds to make up for the shortfall, sell some private equity positions at a discount on the secondaries market or even issue debt, according to Markov, a research firm that studies the opaque world of endowments.”

MPI research A Private Equity Liquidity Squeeze By Any Other Name was featured in Bloomberg News in a story Top Colleges’ Liquidity Pressured by Weak Private Equity Returns by Marion Halftermeyer who closely covers the intersection between GPs and LPs.

The endowment portfolios of 50 years ago are barely recognizable. As the class of 2024 looks to the future and FY 2024 closes out, Robin Wigglesworth captures the evolution of the endowment model of investing very well in his Financial Times Alphaville piece, “American endowments’ complicated love affair with private equity.” When describing risks of private investments, he mentions MPI research FY2023 Ivy Report Card: Volatility Laundering and the Hangover from Private Markets Investing.

MPI’s CEO interviewed by John Authers‘ protege Richard Annerquaye Abbey on Ivy League endowments and how MPI Transparency Lab keeps tabs on risk, return and asset class attribution at the large, elite schools employing the Yale Model. See their Bloomberg Opinion “Points of Return” column “Don’t Declare the Death of the Yale Model Just Yet” covering MPI’s latest FY 2023 Ivy Report Card.

CIO Magazine’s Matt Toledo provides an analysis of both the NACUBO’s 2023 Fiscal Year study and MPI’s 9-th annual quantitative report of Ivy Endowment performance and risk. In his article U.S. College Endowments Gained 7.7% in Fiscal 2023, Although Suffer From Weak Alternatives Returns (ai-cio.com)  ​​​“For multiple reasons it is unlikely that endowments that are heavily allocated to private markets and alternatives veer from the so called ‘Yale model’ after the challenges of fiscal year 2023. Our research shows that Ivy and elite endowments are risk takers, and their portfolios are not particularly efficient​,​” MPI CEO Michael Markov was quoted when discussing the possibility of shifting allocations to public equities.

An extensive coverage by Julie Segal in her Institutional Investor article of the MPI’s 9-th annual Ivy League endowment report. She writes: “With little transparency into endowment portfolios, MPI used its proprietary returns-based style analysis to determine the exposure that the Ivy League and elite colleges had to major asset classes — and their contribution to the performance of the entire portfolio in fiscal year 2023… Even in a good year, “you’re not going to get a lot of transparency,” Markov [MPI’s CEO] told Institutional Investor. “But in a bad year, you’ll get zero transparency from endowments. It’s not pensions where they have to give something to people.”

“Risk parity strategies – designed to withstand all economic circumstances – have been tested in recent times by the triple threat of unfavourable rates, spiked inflation and asset correlation breakdowns. Few managers in the field were above water through most of 2023; some saw increased portfolio risk exacerbated by leverage and untamed volatility, says a study by Markov Processes International.” – writes Luke Clancy in his Risk.net article “Can risk parity ride out the storm of correlated asset chaos?” The article extensively quotes MPI’s original research.

Jeff Schwartz, president of Markov Processes International, a fintech firm that advises wealth and asset managers, drew a parallel between bitcoin and emerging markets and commodities, two asset classes that gained traction in investors’ portfolios in the 1990s and early 2000s.
Those “were asset classes far better understood by most investors than bitcoin is,” Schwartz said. Nevertheless, “allocations were capped at a very low level (at the time), out of prudence.”
– writes Reuters reporter Suzanne McGee in her story that discusses the approval of U.S. bitcoin ETFs.