Key Takeaways
- • Andrew Sweeney, managing director and institutional portfolio manager at PH&N Institutional, told the Canadian Investment Review's 2026 Endowment & Foundation Investment Forum that the shift from U.S. hegemony toward spheres of influence centred on China and Russia is driving deglobalization.
- • Sweeney warned that deglobalization is likely to produce slower economic growth and higher inflation, both difficult conditions for investment portfolios, with trends that tend to persist for an extended period.
- • Increased defence spending is a consequence of deglobalization, with Canada having achieved its two per cent defence expenditure target in March 2026.
- • Sweeney argued that the true measure of portfolio success is whether it protects capital in a downturn while still meeting required disbursements, not short-term market returns.
- • Harvard's $53-billion endowment, with about 80 per cent in illiquid strategies, was immobilized after 2025 federal funding freezes, forcing it to issue more than $1 billion in bonds to access a couple of billion dollars of liquidity.
Summary
Endowment funds and foundations are operating in a more difficult investment environment shaped by a changing world order, according to Andrew Sweeney, managing director and institutional portfolio manager at PH&N Institutional. Speaking at a session of the Canadian Investment Review's 2026 Endowment & Foundation Investment Forum, as reported by Benefits Canada, Sweeney described a transition from an era of U.S. dominance toward spheres of influence, with China and Russia increasingly assertive. He said this dynamic leads to deglobalization, with economies coalescing around major powers.
Sweeney linked deglobalization to significantly higher military spending, including in Canada, which achieved its two per cent defence expenditure target in March. He expects deglobalization to produce slower economic growth and higher inflation, conditions he described as particularly challenging for investment portfolios, with such trends likely to persist for an extended period.
To build resilient portfolios that can meet objectives across market environments, Sweeney advocated balancing short- and long-term goals. He said endowments and foundations face growing portfolio complexity, which complicates oversight for investment committees and boards. There are no perfect solutions, he said, only a series of well-managed trade-offs. A defensive portfolio may lag a strong bull market but will protect capital in a downturn. He emphasized that investors should measure success against the objectives in their investment policy statement rather than focusing on market returns, and that the key test is protecting capital in a down market while still meeting necessary disbursements.
Sweeney also highlighted the role of alternative assets in uncertain conditions. He cited Harvard University, whose $53-billion endowment became largely immobile after the U.S. administration froze its funding in 2025, with about 80 per cent of the fund allocated to illiquid strategies. Harvard responded by issuing more than $1 billion in bonds, accessing a couple of billion dollars in liquidity. Sweeney said the episode showed that a portfolio assumed to have a long time horizon and stability could prove otherwise under stress.
Sweeney linked deglobalization to significantly higher military spending, including in Canada, which achieved its two per cent defence expenditure target in March. He expects deglobalization to produce slower economic growth and higher inflation, conditions he described as particularly challenging for investment portfolios, with such trends likely to persist for an extended period.
To build resilient portfolios that can meet objectives across market environments, Sweeney advocated balancing short- and long-term goals. He said endowments and foundations face growing portfolio complexity, which complicates oversight for investment committees and boards. There are no perfect solutions, he said, only a series of well-managed trade-offs. A defensive portfolio may lag a strong bull market but will protect capital in a downturn. He emphasized that investors should measure success against the objectives in their investment policy statement rather than focusing on market returns, and that the key test is protecting capital in a down market while still meeting necessary disbursements.
Sweeney also highlighted the role of alternative assets in uncertain conditions. He cited Harvard University, whose $53-billion endowment became largely immobile after the U.S. administration froze its funding in 2025, with about 80 per cent of the fund allocated to illiquid strategies. Harvard responded by issuing more than $1 billion in bonds, accessing a couple of billion dollars in liquidity. Sweeney said the episode showed that a portfolio assumed to have a long time horizon and stability could prove otherwise under stress.
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