The Endowment Index, calculated by Nasdaq OMX, declined 3.17% (on a total return basis) for the 12 months ended December 31, 2015.
This compares to a 1.38% gain for the S&P 500 during the same period. The index was established as a benchmarking tool for investors in globally-diversified, multi-asset portfolios that include alternative investments. It is comprised of three major asset class building blocks: global equity, global fixed income, and alternatives which includes hedge funds, private equity and real assets. It was the Endowment Index’s first calendar year decline since 2011.
Eight of the index’s 19 investable components provided a positive return during 2015, and the gains were minimal. Only domestic real estate, international fixed income and private equity were able to gain more than 1% for the year. Of the 11 components that declined in 2015, all but emerging market equity were in the alternatives portion of the index and three quarters of the index decline was attributed to just four asset classes: metals and mining, emerging market equity, oil and gas, and hedge funds.
The Endowment Multi Asset ETF Allocation, a collective investment trust available for use in defined contribution (DC) plans and managed by ETF Model Solutions, employs a passive investment approach based upon the Endowment Index.