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University Endowment Committees, Modern Portfolio Theory and Performance

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  • Mimi Lord

    (Weatherhead School of Management, Case Western Reserve University, Cleveland, OH 44106, USA)

Abstract

University endowments with broad portfolio diversification have been correlated with performance, but committees’ decision-making process has received relatively little attention. This study is unique in postulating that the committee’s learning commitment and open-mindedness are significant contributors to a decision process that is based on the principles of Modern Portfolio Theory (or, simply, Portfolio Theory). The use of Portfolio Theory as a decision-making framework leads to greater portfolio diversification, which, in turn, leads to higher risk-adjusted returns. This study also demonstrates that greater committee expertise across multiple asset classes contributes to more diversified portfolios.

Suggested Citation

  • Mimi Lord, 2020. "University Endowment Committees, Modern Portfolio Theory and Performance," JRFM, MDPI, vol. 13(9), pages 1-22, September.
    • Handle: RePEc:gam:jjrfmx:v:13:y:2020:i:9:p:198-:d:408459
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    References listed on IDEAS

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    Cited by:

    1. Cem Berk & Bekir Tutarli, 2021. "The Effect of Systematic Risk and Previous Period Returns on Portfolio Selection," Applied Finance and Accounting, Redfame publishing, vol. 7(1), pages 1-9, February.

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