Falling Markets Send Endowment Index 7.5% Lower in Q3

The benchmark Endowment Index fell 7.50% during the third quarter ended September. 30, with 19 of the index’s 22 components recording declines. The index underperformed a global 60-40 portfolio, which declined 6.81% over the same period.

The index, which was created by ETF Model Solutions and is calculated by Nasdaq OMX, contains 22 sub-indexes that track more than 48,000 underlying securities. Only three of the sub-indexes saw positive returns for the quarter. Not surprisingly, with an energy crisis caused by Russia’s invasion of Ukraine that has sent oil prices soaring, commodity-oil and gas was the top-performing asset class, rising 8.55% during the quarter. Master limited partnerships (MLPs) also performed well during the quarter, increasing 8.09%, while the only other gainer—Treasury bills—nudged 0.44% higher.

More than one-third of the index’s components saw double-digit losses during the quarter, with emerging markets-China as the worst-performer, plummeting nearly 20%. Chinese equities were followed by international real estate and private equity/venture capital assets, which dropped 13.70% and 13.40% respectively. Timber also did poorly during the quarter, losing 11.35%.

The index measures performance for a portfolio that includes global equity, global fixed income, and alternative investments, including private equity, hedge funds and real assets. The index’s methodology is based on the portfolio allocation data of more than 700 educational institutions that collectively manage over $820 billion as of June 30, 2021.