The Lessons of History – Endowment and Foundation Investing Today

John Bogle

Research

15 Pages

This paper examines what 15 years of endowment investing can teach about portfolio construction, risk, and future returns. John Bogle finds a simple balanced index portfolio remained competitive with institutional endowments while taking less risk, challenging the assumption that greater complexity necessarily produces better outcomes.

Key Takeaways

Simplicity Stayed Competitive: A 50/50 index portfolio returned 7.1% annually over 15 years versus 7.3% for the average endowment, with volatility of 8.9% versus 11.3%.
Alternatives Expanded Rapidly: : Endowments increased alternative investments from 25% to 50% of assets over 10 years, while the largest funds reached 60%.
Fundamentals Drove Returns: Across 11 decades, U.S. stocks returned 9.1% annually, including 8.8 percentage points from dividends and earnings growth and only 0.3 from valuation changes.
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