By Greg Morcroft - Big pension funds and university endowments that shifted their investment portfolios to include fewer stocks and more alternative investments after the recent financial crisis have missed out on a stock rally that’s global markets to near record highs, the according to a Wall Street Journal analysis.
The paper said on Tuesday that the investors that switched strategies, like General Motors (NYSE:GM) and Harvard University’s endowment, did have better returns than stocks in 2008, probably the worst year of the crisis. But, from 2009 until the present stocks have outperformed most other assets.
The report qualified the data by pointing out that most of the investors studied have very long-term horizons, so those bets could still play out over time, or also be part of a broader hedging strategy. It also pointed out that when the time frame is expanded to 10 years, some o the alternative investments outperformed stocks.
The report concluded that:
Missing out on recent stock gains, though, adds to challenges facing pension funds, some of which don't have enough assets to meet future obligations. For universities dependent on endowment income, reducing stockholdings represents a lost opportunity in a time of stretched resources.