Annelena Lobb has this report on the prowess of big endowments.

What can retail investors borrow from the money-management strategies of high-flying foundations and university endowments? Not much, actually.

Laurance Hoagland, CIO of the William and Flora Hewlett Foundation, in a conversation earlier this week, discussed certain advantages large endowments have over smaller investors. The ability to meet high minimum investments and do in-depth research, and, in terms of not-for-profit organizations, their tax-exempt status, make endowments’ circumstances entirely different from those of retail investors, he said.

“Those of us in the not-for-profit or pension world easily forget what an advantage we have in being tax-exempt,” he said in an interview, shortly before co-hosting a workshop about endowments’ strategies at this year’s CFA Institute Annual Conference in Vancouver, Canada.

For quite a while, the largest endowments have seemed to make money hand over fist. At the very top of the list, Yale University’s endowment earned 28% in its most recent fiscal year.

But Mr. Hoagland says that he believes endowments will find it “dramatically more difficult” to earn the same returns in future that they do today. Colleges now have an average of 42% of their assets in alternative investments, about twice the percentage they had eight years ago, according to Commonfund, a nonprofit firm that manages money for colleges. Twenty years ago, most alternative-asset markets were still inefficient, and endowments were among the first to exploit them, Mr. Hoagland said.

Now, they compete against many other investors — including high-net-worth individuals, pension funds, and the “poster child of the moment,” sovereign-wealth funds, he said. Endowments compete for “a smaller piece of a less-attractive pie,” he said. As huge amounts of capital pour into alternative assets, returns on those assets should fall.