The Missing Metric for Endowment Growth: Net Flow Rate

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  • The net flow rate is the regular LTIP payout rate plus reinvested operating surpluses, capital additions, and capital withdrawals.
  • Over the long term, the real investment return must exceed any net outflow to ensure the LTIP sustains its role in the business model.
  • To track the ability of the LTIP to keep pace, and to consider other financial levers as well as investment performance, we suggest that the net flow rate be measured each year.