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Endowments Turn to Tech for a Portfolio Boost

New algorithms are helping struggling foundations improve their yield.

Photo by geralt & Joseph Williams

In 2016, US colleges raised a record $41 billion, with Harvard University leading the pack with $1.2 billion from donations and Stanford coming in a close second at $951 million. While these statistics reflect well on the generosity of wealthy donors, the unfortunate reality is that these same university endowments declined 1.9 percent on average due to poor portfolio performance. Harvard alone had $2 billion in losses.

Stanford was able to offset its investment losses with positive performance of its real estate assets. Other colleges and universities were less fortunate, since their years-old broad-based asset allocation approaches failed to provide solid returns in today’s dynamic business climate. In particular, investments in non-US equities, energy and natural resources, hedge funds, commodities and managed futures declined during 2016.

What comes next and what actions should today’s savvy Investment Committee member at a leading university take to improve performance and encourage a continued flow of donations?

In today’s era of disruptive technology, the number of university programs teaching students to use algorithms, robotics and sophisticated computer modeling to develop new approaches in all aspects of life is increasing. Likewise, it is clear that the investment process is no longer ‘business as usual” as times are changing.

More than ever, today’s endowments understand the value of Next Generation algorithmic trading as a way to augment performance and safely navigate market volatility. Indeed, high yielding niches in the gold, silver and currency spot markets are now more popular than ever with investment committees seeking strong returns to make up for broad based losses. We’ve seen heightened interest across the board as investors’ interest in Forex strategies continues to grow.

A few reasons the Forex strategy is ideal for endowments include:

Exceptional Results with Minimal Risk

Firms such as Mediatrix Capital, Inc. provide managed account services as well as hedge fund structures that allow endowments to benefit from trading the Foreign Exchange market. By utilizing sophisticated suites of algorithmic technology and artificial intelligence tools, it is possible to achieve exceptional results while managing the downside risk of trading.

Ideally, top performing Forex managers will offer a high growth rate investment opportunity with 100% transparency, 100% liquidity and world class, dependable monthly returns that most endowments only hope for in any single year’s time. That’s one great way to keep the wealthy donors writing checks!

Experienced Managers Produce Strong Results

Before making the decision to invest with a manager, investment committees must do the proper due diligence and seek out respected traders and published FX Spot and FX OTC Options strategists with a track record of exceptional operations, trade management, technology/algorithm development, risk mitigation, and overall funds management experience.

Mediatrix, for example, began developing its Forex Spot Market algorithms in 2007. By mid-2013, the company went live trading first the managers’ own capital and shortly thereafter, client funds. As of February 2017, Mediatrix has achieved 38 straight months of client gains, based on an audit from December 2013 to the present date.

Imagine how that would have benefitted Harvard in 2016!

Forex: The ‘Secret’ to Portfolio Construction

While it’s not exactly a secret, endowments today need to pay close heed to their investment philosophy by emphasizing portfolio construction with an asymmetric return profile and definable and downside risk to capital invested. By utilizing proprietary artificial intelligence and algorithmic approaches that incorporate overlay and absolute return strategies with distinctive methodologies it is possible to achieve stellar returns.

The bottom line is that university endowments are hugely important to the success of any educational institution. Unfortunately, most have been following the same investment strategy for many years and what worked successfully in the past is no longer a good solution as evidenced by lackluster performance. Today, however, universities are technologically savvy and are waking up to the necessity of using the same artificial intelligence and advanced algorithmic tools and techniques they teach their students to manage their own money.

For further information on how Mediatrix Capital helps endowments and foundations boost returns, visit www.mediatrixcapital.com or call 1-800-905-1006.

Disclaimer

In no event should the content of this material be construed as an advertisement, express or an implied promise, guarantee or implication by or from Mediatrix Capital Inc. (MC) or any of its partner or subsidiary companies. This is not an attempt to sell or solicit any security and should not be taken as such. The content of this document is for informational purposes only. Potential Accredited Investors are advised to carefully read the Disclosure Documents to determine whether a managed investment in MC is consistent with their financial situations and investment objectives. Past results are no guarantee of future performance. Mediatrix Capital is a foreign corporation based in Nassau Bahamas, and does not operate within the United States.

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