How is MIT’s endowment invested? Is our current financial situation the result of overly risky investment or spending decisions?
MIT’s endowment is professionally managed by the MIT Investment Management Company (MITIMCo), with the oversight of a Board of Directors appointed by the Executive Committee of the MIT Corporation. The endowment is invested in a diversified portfolio of assets designed to provide financial resources for both current and future generations of scholars, an objective commonly described as “intergenerational equity.” The paradox of endowment management is that current generations favor the relative stability associated with fixed income investments, while future generations favor the high real rates of return associated with equity investments. If MIT is to spend approximately 5% of the endowment market value each year to meet the needs of current generations, the portfolio must grow at least that much each year (after inflation) to ensure that the endowment will provide similar resources to MIT students decades and centuries from now. In managing the endowment, MIT targets high real rates
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