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Household Endowment Model

Years of global, unconventional monetary policy has driven stock prices up and interest rates down. Against a backdrop of potentially-ongoing change, where do long-term investors look for guidance?

The nation’s most successful educational endowments, such as those at Harvard, Yale and Stanford universities, hold assets in excess of $1 billion and have long track records of outperforming major indices and benchmarks through many market cycles.*

The Household Endowment Model combines personalized planning strategies for the individual investor with time-tested asset allocation techniques of the nation’s top endowments. This philosophy is based on three central pillars:

  • Advanced diversification — diversification is a portfolio’s first line of defense in managing risk. It consists of building a steady allocation that features a mix of assets built for an investor’s long-term goals, such as growth or income.
  • Tactical management — market conditions are fluid, so portfolios must be able to adapt to them. Fine tuning portfolio allocation can help take advantage of potential opportunities, as well as sidestep the negative effects of market volatility and preserve capital. Standing ready, watching these underlying market themes is critical.
  • Manager selection — the model relies on making heady, shrewd manager selections. It consists of picking managers that have demonstrated the ability to outperform through stock selection and a disciplined investment methodology, which aligns with the model’s philosophy to be diversified and opportunistic."