Scheer: Moving average spending rules effectively doubled drawdowns after 2008
Karl Scheer · Karl Scheer – Competing Sensibly as CIO of the University of Cincinnati (EP.74) · Oct 29, 2018 · at 41:30
Karl Scheer explains how multi-year moving average spending policies forced institutions to pull outsize capital at market bottoms following the 2008 financial crisis.
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“After 2008, people were spending five percent Based on the last couple of years values, which was 10% based on their 2009 values. And so what that does is it takes a significant number of dollars out of the endowment. So it is very difficult to recover. The number of dollars that are recovering is much, much less than the number of dollars that got hit by the crisis.”
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