Endowment and foundation funds are shifting towards riskier assets like emerging markets and private equity to enhance returns while seeking improved governance and transparency from asset managers. A survey conducted by the Economist Intelligence Unit revealed that many institutional investors are concerned about their operational infrastructure and the challenges in due diligence during manager selection. Respondents emphasize the need for stronger governance and a broader view of risk management, including heightened focus on cybersecurity.

1. 1
%%
Endowment and Foundation
Respondents by Region
Endowment and Foundation
Respondents by Investable Assets
21%
35%
44%
13%
22%
65%
■ Americas
■ EMEA
■ APAC
■ Less than $100m
■ $100m – $499m
■ $500m or more
Endowment and foundation funds are adopting a new approach to risk as
they seek to boost their investment returns. Our recent research shows
institutional investors in this sector are moving into riskier asset classes, in
particular, emerging markets, infrastructure and private equity. But they’re
also seeking to improve internal governance, and looking for increased
transparency from their asset managers. With a more hands-on approach
to investment management, they can strike the right balance on risk and
return in an increasingly challenging environment.
About the research
On behalf of State Street, the Economist Intelligence Unit conducted
a global survey of institutional asset owners during July and August
of 2014. The survey garnered 170 responses from endowment and
foundation executives globally, spanning public and private institutions.
Source: State Street 2014 Asset Owner Survey, conducted by the Economist Intelligence Unit
Research Summary
A Hands-on Future for
Endowment and Foundation Funds
52%willrampuprisk
appetiteinsearch
ofbetterreturns
56%sayconductingdue
diligenceinmanager
selectionisachallenge
44%saystrengthening
overallgovernance
isahighpriority

2. www.statestreet.com/ourbusiness
2
Asset Owners
Research Summary
CORP-1166 Expiration Date - 11/30/2015
If you would like to
discuss these results,
please contact:
Martin Sullivan
Head of Asset Owner
Sector Solutions, Americas
+1 617 664 3164
martin.sullivan@statestreet.com
Highlights
• Only 11% are strongly
confident their operational
infrastructure can support
portfolio changes
• 32% say they will
increase the proportion
of their assets managed
in-house
• 41% say better
data management
is a high priority
Our research reveals that respondents are focused
on three key areas:
Shifting investment strategies
Endowments and foundations are taking on riskier or more complex
asset classes to drive up growth.
• The majority of global respondents (62 percent) see greater investment
opportunity in emerging markets.
• Alternatives are important to the strategy, with 38 percent planning
to increase their allocation to infrastructure and 26 percent intending
to increase their allocation to private equity.
Defining new relationships with asset managers
Endowments and foundations are looking for asset managers who
can deliver solutions that are aligned with their long-term investment
objectives. Due diligence in manager selection, both pre- and post-hire,
remains top of mind.
• Only 38 percent of global respondents believe that innovation in investment
products is keeping pace with the needs of institutional asset owners.
• Almost half (46 percent) of respondents say that gaining a complete picture
of risk-adjusted performance from external managers is a challenge.
A more hands-on approach to governance
Tighter governance controls are needed to comply with regulatory
demands and meet external stakeholder expectations.
• More than half (56 percent) of global respondents believe the increasing
sophistication of their portfolios will require a change in their trustees.
• A broader perspective on risk management is needed — one quarter
of respondents say cyber security is now a high priority.
To thrive in this new environment of elevated risk and heightened performance
demands, endowments and foundations are taking a more proactive approach
to the future and all aspects of operations and governance.
Risk associated with equity investing include stock values which may fluctuate in response to the activities of individual companies and general market and economic conditions.
Investing in foreign domiciled securities may involve risk of capital loss from unfavorable fluctuation in currency values, withholding taxes, from differences in generally accepted
accounting principles or from economic or political instability in other nations. Investments in emerging or developing markets may be more volatile and less liquid than investing in
developed markets and may involve exposure to economic structures that are generally less diverse and mature and to political systems which have less stability than those of more
developed countries. There are risks associated with investing in real assets and the real assets sector, including real estate, precious metals and natural resources. Investments can
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make no representation or warranty as to its accuracy and you should not place any reliance on this information. The information provided does not constitute investment advice and
it should not be relied on as such. It should not be considered a solicitation to buy or an offer to sell a security. It does not take into account any investor’s particular investment
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