Should Endowments Invest In Actively Managed Funds?

It’s commonly accepted that it’s better to have your money in a passive fund that tracks the market with relatively low fees than to pay more for management that often doesn’t even beat the index, but this advice is usually directed at individual investors. Institutional investors have more resources at their disposal and a longer investment horizon, which could let them take better advantage of strong investment managers. Endowments can afford to be patient “Active management for endowments is significantly positively related to higher returns net of fees from U.S. equity allocations over the evaluation period,” write Commonfund Institute chief…