Top Performing Institutional Investors are Allocating 40% to Private Investments
According to the latest research conducted by Cambridge Associates¹, top decile performing institutional investors have increased their private investment* allocations to a mean of 40%.
Private Investment Allocation
1998
2018
Private investments
*Private investments include non-venture private equity, venture capital, distressed securities (private equity structure), private real estate, private oil & gas/natural resources, timber, and other private investments.
Many of the world’s leading institutional investors allocate substantially to private investments.
39.5%2
49.6%3
52.4%4
57%5
1Cambridge Associates Research Report February 2019, 2Columbia University 2018 Financial Report, 3Princeton University Report 2017-2018, 4Yale News; 5University of Texas
The higher the allocation to private investments, the better the returns.*
According to Cambridge Associate's endowment and foundation research, the average annualized return for a greater than 15% allocation was 8.1 %, 160 basis points higher than the group with a less than 5% allocation.
20 year Average Return (%)
20 year Average Private Investment Allocations (%)
Private equity allocations under 5%
Private equity allocations between 5% and 15%
Private equity allocations over 15%
*Analysis includes 132 endowments and foundations that provided returns and beginning year asset allocation for each June 30 from 1998 to 2018. Subgroups are based on each institution's 2 0 -year average allocation to private investments. Solid lines are drawn where the median private investments allocation for the entire universe with the median return for the entire universe.
**Private investments include non-venture private equity, venture capital, distressed security (private equity structure), private real estate, private oil & gas/natural resources, timber, and other investments. Endowment and foundation data as reported by Cambridge Associates LLC. Graphs are for illustrative purposes only.
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