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Risk of endowments/pensions?

Hi everyone,

Do endowments generally have "above average" risk tolerance because they have such long time horizons? I thought they did, but then schweser has an answer where they say that "average" is relative to other similar institutions, so most endowments must have average risk tolerance.

Thanks,
Ari

I would disagree with average, most of them have above average risk ability because of long time horizons and no contractual liabilities.

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I also think it depends on whether the endowment is funding a significant portion of the sponsor's operating budget. Typically if it funds 5% or less then it is not considered significant.

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