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No crystal ball on FY2016 results

Experts share expectations for the rest of the fiscal year
University Business, April 2016

It’s certainly not black or white for investors.

“The discussion around the table in investment committees is: How do you allocate risk across various investment options available to optimize returns for five to seven years? There isn’t a neat, pat answer,” says Bill Jarvis of the Commonfund Institute.

The problem: While stocks and bonds assure liquidity and access to investment capital, their return on investment is below the 7 to 7.5 percent that schools target. Alternative strategies that have potential for a higher return rate than stocks and bonds tie up capital for 10 to 12 years, making them less appealing for institutions that need more liquidity.

While nobody has a crystal ball, here’s what some experts say about what to expect for fiscal year 2016:

  • Stuart Mason, University of Minnesota: “On average the estimate now for stocks is 5 percent and it’s 2 percent for bonds.”
  • Brad Conger, director of the Investment Strategy Group at Hirtle Callaghan: “Halfway through the year, it’s easy to say that the numbers will be underwhelming and below that 6 percent 10-year average.”
  • Trey Thompson, Perella Weinberg Partners: “We’re counseling clients to expect more muted returns over the next five to seven years when compared to healthy returns produced since 2009.”

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