Document Type



This work was conducted to further my knowledge in the disciplines of finance, investments, and endowment management.

First Faculty Advisor

Kevin Maloney

Second Faculty Advisor

Gao Niu


finance; investing; investments; endowment; endowments


Bryant University

Rights Management



The analysis revealed better combinations of asset allocation and spending policy for college and university endowments that efficiently balance the desirable outcomes of stable spending in real terms against maintaining the purchasing power of the endowment over time (intergenerational equity). Using the variability and correlation of historical asset class returns, we created a forward-looking, projection-based, multivariate Monte Carlo simulation of individual asset class returns. The simulation incorporates the relationships between inflation and asset class returns, and the relationships among asset class returns. The projected time series of asset class returns produced a time series of endowment portfolio returns given an asset allocation. Applying a spending policy to each time series of portfolio returns generated the associated time series of spending and endowment values in nominal and inflation-adjusted terms. We tested 18 different endowment combinations (6 asset allocations x 3 spending policies) to examine three crucial endowment management decisions concerning: alternative assets in asset allocation, equity assets in asset allocation, and inflation factors in spending policy. Our findings suggest that inflation-adjusted spending policies combined with portfolios that include alternative assets and greater equity allocations are better for achieving intergenerational equity. In addition to the specific combinations studied, the simulation engine that was developed can be extended and utilized to test multiple additional asset allocation and spending policy combinations to further our understanding of this important issue.