BBRG: Ivy League Endowments Make the Same Old Mistakes

Ivy League Endowments Make the Same Old Mistakes
Hedge funds and natural resources underperformed. New investments in private equity look no better.
Bloomberg, October 9, 2019




This week’s Bloomberg column looks at the lackluster collective performance of Ivy League university endowments:

Harvard: 6.5%,
Yale 5.7%;
University of Pennsylvania 6.5%;
Dartmouth 7.5%;
Brown 12.4% ( smallest Ivy endowments ~$4 billion)
(Princeton, Cornell and Columbia have yet to report).

Others notable endowments include:

Massachusetts Institute of Technology at 8.8%,
Stanford at 6.5%
Duke at 6.9%.

And some potential Benchmarks:

60/40 portfolio  9.9%
Standard & Poor’s 500 Index 10.4%

This underperformance is consistent with the record of the past decade, with none of the Ivy endowments beating a 60-40 portfolio in the 2008-2018 period, though a couple did come close.

The biggest contributors to the weak performance of endowments were high exposure to hedge funds (2019 returns = 1.1%) and natural resources (2019 returns = -6.8%). Add tot hat the high operating costs that many endowments’ have and you see another large drag on compounded returns.

But there are big changes afoot; not towards the lower cost 60/40 portfolio, but elsewhere: As endowments cut back on their exposure to hedge funds, they have found a new object of affection: private equity.


Full column here




I originally published this at Bloomberg, October 9, 2019. All of my Bloomberg columns can be found here and here





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