A new study that examines over a century of returns of eight Ivy League and four non-Ivy League endowments shows the “critical advantage” of long-term strategy. This according to an article in Bloomberg.

The study analyzed endowment portfolio asset allocations and performance over the past century to compare annualized real growth rates as well as risk (volatility and Sharpe Ratio from 1950 through 2017) and found the following:

Here are some takeaways from the study:

• Bond allocations have decreased considerably.
• Endowments have become “largely vehicles for equities by mid-century, and benefited to the full from the bull markets from 1950 to 2000. However, they were already beginning to cut back on equities at that point. This process has carried on in a big way in the last two decades.”
• Real estate is not a focus for endowments, but alternative investments have “exploded.”
• “All have compounded real growth for more than a century, and a massive accumulation of assets has resulted.”
• On average, endowments have been counter-cyclical—“The greatest advantage of their long-term outlook is that they are free to be counter-cyclical.”
• All have cut equity exposures a bit ahead of major stock market crises, “loading up on stocks immediately afterward.”

The article concludes: “Being able to look to the very long term does, it emerges from this evidence, help investors deliver bigger returns. It’s not a luxury that many of us have, but the more we can try to look to the long term, and look through the turbulence straight ahead, the more things will tend to work out.”