A spending rule where distributions grow at the CPI rate but are constrained within floor and ceiling bands expressed as percentages of current market value.
The expected return, volatility, and correlation estimates for each asset class that serve as inputs to portfolio simulation models.
A matrix decomposition technique used in portfolio simulation to generate correlated random returns that preserve the observed relationships between asset classes.
The expected portfolio loss in the worst outcomes beyond a specified confidence level — also known as expected shortfall or tail loss.
The tendency of different asset classes to exhibit returns that move in relation to one another, captured through a correlation matrix in portfolio simulation.
The minimum amount a private foundation must distribute annually for charitable purposes, generally 5% of the average fair market value of non-charitable-use assets.
The movement of asset class weights away from their policy targets due to differential returns between asset classes.
An investment approach pioneered by Yale's David Swensen emphasizing heavy alternatives allocation, illiquidity premium capture, and a perpetual investment horizon.
The tax imposed on private foundations under IRC §4940 on net investment income and under §4942 on undistributed income.
A spending rule blending a CPI-linked inflation component with a market value component, balancing distribution stability and market responsiveness.
The excess return investors expect to earn for holding assets that cannot be quickly sold without a significant price discount.
The Internal Revenue Code section imposing a 1.39% excise tax on the net investment income of private foundations.
The Internal Revenue Code section requiring private foundations to distribute at least 5% of their net investment assets annually for charitable purposes.
The pattern of private equity returns where early-year performance is negative (due to fees and investment cost basis) before turning sharply positive as investments mature.
The largest peak-to-trough decline in portfolio value over the simulation horizon, expressed as a percentage.
A computational method that runs thousands of market scenarios to estimate the probability distribution of portfolio outcomes.
The income earned from a foundation's investment assets, net of related expenses — the base to which the §4940 excise tax applies.
An external firm that assumes discretionary investment management responsibility for an institution's portfolio, including asset allocation and manager selection.
The practice of comparing an endowment's investment performance, asset allocation, and spending policy against data from peer institutions.
A visualization showing the distribution of possible portfolio values at each future year as a set of percentile bands expanding over time.
The percentage of Monte Carlo simulation paths in which the portfolio value reaches zero or a critically low threshold within the projection horizon.
Grants and expenses that count toward satisfying a private foundation's annual distributable amount requirement under IRS §4942.
A portfolio discipline where asset class weights are restored to targets only when they drift beyond predetermined tolerance bands.
A spending rule that applies the rate to a trailing average of market values — typically 12 or 20 quarters — to smooth year-to-year distribution changes.
A measure of risk-adjusted return calculated as the excess return of a portfolio over the risk-free rate divided by its volatility.
A spending rule that applies the spending rate directly to the current market value of the endowment, creating fully market-responsive distributions.
A risk-adjusted return measure similar to the Sharpe ratio but using only downside deviation (not total volatility) as the risk denominator.
A rule or formula that determines how much an endowment or foundation distributes annually for operations, grantmaking, or programs.
An investment approach that funds spending from total portfolio return (income plus capital appreciation) rather than from income alone.
The Uniform Prudent Management of Institutional Funds Act — the legal framework governing endowment management, spending, and investment for most U.S. nonprofits.
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