Most college and university endownment funds allocate 60% of assets in equities and 40% in fixed-income. Although 60-40 continues as the long-run favorite asset allocation ratio for education institutions, 60-40 no more sense than it ever did. Over the long run, stocks have been the asset with the highest returns; in briefer time periods, stocks missed only infrequently. There is strong evidence that endowments should be holding more in equities; however, trustees are by nature a cautious breed. One method of adjusting gradually to a greater commitment to stocks, without a dramatic change from a traditoinal 60-40 policy, is to stop rebalancing, and let the growth of stocks carry the proportion upward.
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