Larger Endowments Do Better, Invest More In Alternatives

Jan 26 2006 | 7:41pm ET

The rich keep getting richer, or so it seems for endowments.

Over the last decade, colleges and universities with over $1 billion in their endowments have earned an average of 12% per year, compared to those with under $25 million, which earned an average of 7.9%, according to a recent survey by the National Association of College and University Business Officers.

The NACUBO survey also showed that billionaire colleges invested 21.7% of their endowments in hedge funds last year, compared to 2.4% of lessendowed schools.

The larger endowments also invested a higher percentage of their assets in other alternatives, such as private equity, venture capital, natural resources and real estate.

The NACUBO report, in which 746 institutions were polled, draws the conclusion that the wealthier colleges can afford more sophisticated financial advice and therefore have better returns.

Other stats by the Association show:

  • There are 56 schools with endowments topping $1 billion.
  • Harvard University has the biggest endowment with $25.5 billion, followed by Yale University with $15.2 billion.
  • The wealthiest school per student is Rockefeller University in New York.
  • On average, colleges spend 5% of their endowments each year on things such as scholarships and facilities improvements.

In Depth

Delayed Flash Crash Arrest Highlights Difficulties Detecting Fraud

Apr 23 2015 | 7:19am ET

The five years it took regulators to bring high-profile charges against a UK trader...

Lifestyle

Puerto Rico Woos The Rich But So Far Gains Little

Apr 17 2015 | 2:45am ET

Hedge fund manager Rob Rill grins. He has just had word that U.S. financial regulators...

Guest Contributor

Opportunities Ahead: Asian Fixed Income and Currency Markets

Apr 24 2015 | 6:18am ET

For hedge funds focusing on Asia, the policy uncertainty, unclear interest rate...

 

Editor's Note