Research

Best Practices Research

This case study is drawn from a broad range of industry practices and not exclusively from Equitas client relationships. The research conducted by Equitas into the best practices of the largest institutional investment programs allows our clients to see not only what other institutions of a similar asset size are doing, but also what the most successful investment programs are doing, regardless of their asset size.

Conventional benchmarking against both absolute and relative measures such as a market index or a style peer group only provides one dimension of comparison. By examining what the best and the brightest investment programs are doing we gain an added dimension of evaluation that we can use as an overlay to the investment policy and asset allocation designed to meet the specific and individual needs of each client.

The following table illustrates the periodic returns for periods ending June 30, 2007 for institutional clients of differing asset sizes.

Average Investment Returns

  One Year Three Years Five Years Ten Years
Greater than $1 Billion 21.3% 16.4% 13.9% 11.1%
$501 Million to $1 Billion 19.3% 14.2% 12.3% 9.5%
$101 Million to $500 Million 18.0% 13.1% 11.5% 8.5%
$51 Million to $100 Million 16.7% 11.9% 10.8% 7.9%
$26 Million to $50 Million 15.9% 10.7% 9.8% 7.3%
Less Than $25 Million 14.1% 9.7% 8.6% 6.7%
         
S&P 500 Index 20.6% 11.7% 10.7% 7.1%
LB Aggregate Bond Index 6.1% 4.0% 4.5% 6.0%
MSCI-EAFE Index 27.1% 22.7% 18.1% 8.0%

 

The following table shows the average asset allocation for the same institutions for periods ending June 30, 2007.
Average Asset Allocation

  Equity Fixed Income Real Estate Cash Alternatives Other
Greater than $1 Billion 47.0% 11.2% 5.0% 1.6% 34.5% 0.7%
$501 Million to $1 Billion 50.5% 13.3% 5.3% 2.3% 27.8% 0.8%
$101 Million to $500 Million 56.6% 15.1% 3.6% 2.8% 19.8% 2.1%
$51 Million to $100 Million 60.1% 19.2% 3.6% 3.8% 10.4% 1.7%
$26 Million to $50 Million 63.2% 21.3% 3.1% 3.1% 8.3% 1.0%
Less Than $25 Million 59.2% 27.5% 1.8% 6.4% 3.6% 1.0%

 

The following table outlines the average asset allocation within the Alternative Investment space.

Average Investment Returns

  Hedge Funds Private Equity Venture Capital Natural Resources
Greater than $1 Billion 20.5% 7.1% 3.3% 3.6%
$501 Million to $1 Billion 17.7% 5.6% 2.1% 2.4%
$101 Million to $500 Million 13.8% 2.8% 1.1% 2.1%
$51 Million to $100 Million 8.7% 1.2% 0.4% 1.3%
$26 Million to $50 Million 6.9% 0.5% 0.1% 0.8%
Less Than $25 Million 2.9% 0.4% 0.2% 0.3%