Endowments eye crypto allocations amid tougher return outlook for traditional investments

Endowments are rethinking investment strategies as they anticipate weaker returns from traditional assets, where high valuations, tight credit spreads, and crowded private markets offer little room for error. CIOs suggest that the playbook driving past decade's gains may not suffice for the next, leading to expectations of both return and alpha compression across traditional asset classes. For foundations needing to meet high hurdle rates, like the 8% required by the W.K. Kellogg Foundation model, this pressure is pushing investment teams toward riskier or novel strategies. Consequently, some endowments are now allocating to cryptocurrency, viewing spot Bitcoin and Ether ETFs as a simpler route than previous venture fund exposure. While allocations remain small, institutions like Harvard and Brown have disclosed ETF positions, signaling digital assets' move into the mainstream toolkit for diversifying portfolios facing thin equity risk premiums and macro uncertainty.

(Source：CoinDesk)