After plunging more than 20% during the first quarter, Nasdaq OMX’s Endowment Index bounced back during the second quarter to gain 15.40% on a total return basis. It also beat the benchmark global 60-40 portfolio, which increased 12.04% during the same period.
The rebound comes on the heels of what Nasdaq OMX calls “one of the most volatile quarters in the history of global capital markets” and amid signs of an economic recovery and easing of COVID-19 lockdowns. The exchange company said the prospect of the economy opening up, albeit slowly, increased investor risk appetites and were the main drivers of the returns.
The firm also said the sharp turnaround in asset prices was partially due to the commitments from both government stimulus and central banks to help fund the economic recovery with sufficient liquidity.
Of the index’s 24 components, 22 posted gains during the quarter, including 15 that posted double-digit gains. The top performing components of the index were oil and gas, and publicly traded master limited partnerships, which surged 47.61% and 46.85% respectively.
Private equity/venture capital returned 27.51% for the quarter, followed by metals/mining and US equity, which climbed 26.53% and 22.09% respectively. Natural resources and global equities increased 21.63% and 20.30%, while emerging markets gained 18.9%. Managed futures and Treasury bills were the only asset classes that didn’t provide positive returns, losing 3.57% and 0.01% respectively during the quarter.
The Endowment Index represents the investable opportunity for managers of portfolios using the Endowment Investment Philosophy or who incorporate alternative investments within a comprehensive asset allocation.
The index is based on portfolio allocation data from more than 770 educational institutions that managed over $630 billion combined as of the end of June, 2019. Each of the 24 sub-indexes are investable and contain more than 44,000 underlying securities.