Asia-Pacific asset owners make up roughly a third of the world's top 100 asset owners.[1] Yet, Asia’s endowments, foundations and charities (EFCs) as an asset owner group has received relatively less attention compared to most studies that focus on North American or European peers.
This report seeks to help address this research gap by exclusively focusing on, interviewing and examining EFCs located in the Asia-Pacific region. The survey not only explore the portfolio allocation decisions made by these Asia-Pacific EFCs, but also delve deeper into understanding their underlying governance models, investment strategies, and long-term strategic objectives. We strive to understand important questions such as:
It is commonly understood and assumed that EFCs in the Asia-Pacific region generally manage smaller asset bases compared to their global counterparts. Given this, we ponder whether there would be a difference in risk tolerance, portfolio complexity and governance structures that comes with a smaller size? Our strong urge to find out fact from fiction - was a key motivation in doing this survey and report.
Our survey findings indicate that the average Asia-Pacific EFC participant manages assets of just over US$300 million. Although there are still some large EFCs in the region, the majority are still significantly smaller than the multi-billion dollar endowments like Harvard University (more than US$50 billion)[2] or large foundations such as the Ford Foundation and J. Paul Getty Trust (each more than US$10 billion)[3] [4]. It nonetheless represents an enormous pool of capital under management.
By shining a spotlight on this important but relatively underexplored segment of the global asset owner landscape, this report aims to provide unique insights that could inform and influence the investment and management practices of EFCs across the Asia-Pacific region and potentially beyond.
As of early 2024, we surveyed 26 EFCs across the APAC region on their investment practices and expectations.
EFCs each account for about 1/3 of the respondents (see Figure 1). These institutions are based in Hong Kong, Australia, and Singapore, where Hong Kong and Australia each account for about 40% of the participants (see Figure 2).
The objective of the survey is to explore the current and future state of the peer group’s governance, mission and objectives, risk appetite, and portfolio.
Return targets
77% of the asset owners employ relative return targets such as “Cash plus X%” and “Inflation plus X%”, with the majority of asset owners setting 3% to 6% as the outperformance target.
Return range
Of the minority that set absolute returns targets, the return range is from 5% to 9%.
Resourcing and governance structure
In terms of resourcing and governance structure, these asset owners usually have 4-7 investment committee members, and employ 1-3 in-house investment team members.
Spending rule
Approximately 50% of respondents do not have a defined spending rule in place. However, among those that have established a spending rule, the majority set it between 3-4%.
Cash flow expectations
Only 25% of the asset owners expect sizeable outflows in their portfolio in the coming 1-3 years, which underscores their increasing appetite and for private market allocations.
ESG goal policy
Around 70% of the asset owners have no net zero goal and no ESG goal policy.
Asset allocation
Fixed income and public equities remain the most popular asset classes for EFCs, but a growing number of EFCs are considering investing in alternative investments in the future.
Investing type
Active investing rather than passive investing continues to be the most preferred choice for most EFCs.
