Elite university endowments, such as those of Harvard and Yale universities, have been the envy of many for years, writes Bloomberg’s Nir Kaissar. But things have changed. Notwithstanding the “countless resources and connections and clever analysts,” he writes, those endowments have not performed much better than a traditional 60/40 portfolio of U.S. stocks and bonds.

The culprit, explains Kaissar, is the heavy proportion of alternatives in those funds—”big bets on things like hedge funds and private assets”—which have suffered poor performance in recent years.

According to Kaissar, while the deep pockets of these elite endowments will undoubtedly provide ample cushion, the fate might be different for those smaller institutions and individuals who imitate their holdings. That said, he presents three arguments in favor of an optimistic view going forward:

Mean reversion is a powerful force. Research shows that asset prices tend to be cyclical, so the recent struggles of alternatives might give way to stronger returns down the road.

Disappointed investors will pull out of alternatives, but this might boost those who “stick it out.”

With U.S. stock valuations at historic highs and interest rates at lows, he says, “it’s far from certain that the traditional U.S. 60/40 portfolio will keep beating alternatives. It could do worse.”

But there’s another important factor to consider, says Kaissar. “It may not matter what’s ahead for alternatives because even during the best times, there’s a chasm between the returns of elite investors and everyone else.” The best hedge funds and private asset managers, he explains, have limited capacity and elite investors have the pull necessary to get to the front of the line. He describes the spread between the best and worst hedge fund performance as “alarming”:

The upshot, according to Kaissar, is: “Investors shouldn’t kid themselves when mimicking the elite. Why not give that boring portfolio of stocks and bonds a pat on the back for a year well done?”