Beyond Markets Beyond 60/40: The rise of hedge funds in modern portfolios
Nov 19, 2025
Joe Dowling, Senior Managing Director at Blackstone and former steward of Brown University's endowment, dives into the evolving landscape of investment strategies. He discusses how hedge funds are becoming a core allocation for resilience, potentially replacing traditional bonds. Joe explains the endowment model's focus on diversification and long-term stability, highlighting the importance of absolute return strategies and multi-strategy funds. He also shares insights on constructing robust portfolios and the democratization of access to private markets.
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Endowment Model Boosts Returns
- The endowment model uses diversification and the illiquidity premium to boost risk-adjusted returns.
- David Swensen achieved 13.7% annual returns by reallocating away from a pure 60/40 into private assets and alternatives.
Bring Endowment Principles To Families
- Apply endowment principles to private wealth by adopting a long-term orientation and using diversified private vehicles.
- Use permanent capital vehicles to avoid J-curve effects and simplify reporting for family portfolios.
Ivy Endowments Go Very Heavy
- Joe describes top Ivy endowments allocating up to 75-80% to alternatives due to large capital and duration.
- He warns this extreme split isn't a blanket recommendation but shows the range of institutional positioning.