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

An Interview With Harvest Volatility Management's Rick Selvala

Mar 23 2017 | 5:39pm ET

Several years of extremely low interest rates have pushed some investors into equities...

Lifestyle

'Tis the Season: Wall Street Holiday Parties Back In Fashion

Dec 22 2016 | 9:23pm ET

Spending on Wall Street holiday parties has largely returned to pre-2008 levels...

Guest Contributor

SEI: Private Debt Coming Into Its Own

Mar 8 2017 | 9:24pm ET

The explosive growth of private debt over the past few years has caused the lines...

 

From the current issue of