The Endowment Model

Large institutional investors like pension funds, university endowments, and sovereign wealth funds are looked to as thought leaders in portfolio management and asset allocation. Their asset allocation strategies often have a taste for alternative asset classes like hedge funds, private equity, and private real estate.

The fact that institutional investors allocate to these asset classes is in turn used as a sales tactic to convince high net worth individual investors that they should be doing the same. This is a problem. Using what an authoritative figure like a large institutional investor does to support an argument is an appeal to authority - a logical fallacy.

Timestamps:
0:00 Intro to Large Institutional Investors
0:58 Institutional Asset Allocation Strategies
5:23 What Caused the Failure of the Endowment Model?
6:59 The Headwind that Alternative Asset Classes Face
9:25 The Norway Model
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