Ivy League Endowments Are Making the Same Mistakes

Return data from university endowments for the fiscal year ended June 30th “is not pretty,” writes columnist Barry Ritholtz in a recent Bloomberg article. Ritholtz cites return estimates of 8.7% as “too optimistic” compared to actual gains including: Harvard: 6.5% Yale: 5.7% University of Pennsylvania: 6.5% Dartmouth: 7.5% During the same period, Ritholtz reports, the S&P 500 saw total returns of 10.4%: “This underperformance is consistent with the record of the past decade, with none… Read More

Profile: David Swensen and How He Made Yale Rich

A recent article in Bloomberg profiles David Swensen, who has overseen the Yale University endowment for 34 years and has become something of a legend—as well as the school’s highest-paid employee. When Swensen began his tenure at Yale, the article reports, the endowment was worth $1 billion. Today, it stands at $29.4 billion. “Harvard’s stash is bigger, at $39 billion,” the article says, “but Swensen’s reputation is more than a matter of returns and asset… Read More

Yale’s Endowment Fund Lagging the S&P 500

Although Yale University’s endowment fund—and its chief investment officer, David Swensen—have enjoyed a stellar reputation in the industry for decades, a recent article in Morningstar argues that the fund’s reputation “owes to its earlier accomplishments” and that, recently, it has been outperformed by the market. By creating a portfolio of securities that behave like the S&P 500, the article’s author, Morningstar columnist John Rekenthaler, says he “blitzed Yale’s fund over the trailing decade” (except for… Read More

Buffett Annual Letter Offers Advice to Pensions and Endowments

In his annual letter to Berkshire Hathaway shareholders, CEO Warren Buffett tells pension funds and endowments to eliminate high-cost “helpers” that eat into returns, according to an article in Chief Investment Officer. Buffett illustrates his point with the example of his first stock purchase 77 years ago– three shares of Cities Service which he bought for $114.75: “If my $114.75 had been invested in a no-fee S&P 500 index fund, and all dividends had been… Read More

Ivy League Endowments Have Lagged 60/40 Portfolios for a Decade

An article in Institutional Investor reveals the findings of a new study that shows how the nation’s elite school endowments have trailed a passive portfolio of 60 percent stocks and 40 percent bonds over the past ten years. According to Markov Processes International (MPI), the research and analytics firm that conducted the study, this is the first instance in the 16 years it has been collecting data that these elite colleges have lagged the indexed… Read More

Small School Endowment at Top of Class

Quinnipiac University is “beating the biggest names in higher education at investing with the help of an unlikely force: the stock picker.” This according to a recent article in The Wall Street Journal. Of the U.S. schools ranked by the National Association of College and University Business Officers and Commonfund, Quinnipiac’s returns—6.1% annualized for the ten years ended June 30, 2017—ranked in the top 10%. John Lahey and Mark Varholak, the administrators overseeing the $530 million… Read More

Harvard and Yale’s Investing Models Should be Available to Every Investor

In a recent article, Bloomberg columnist Nir Kaissar argued that although it’s time to change the securities laws that prevent people from investing like the elite university endowments, there are questions as to whether such strategies are worth pursuing. Kaissar offers data from the National Association of College and University Business Officers showing that, over the last 30 years, universities with the largest endowments only narrowly outperformed the S&P 500, generating returns of 9.7% compared… Read More

CalPERS Urged to Exceed 7% Return Projections

Concerns that municipalities won’t be able to meet pension payment requirements has led the League of California Cities to urge the CalPERS Investment Committee to think “out of the box” to surpass its current 7% return projections. This according to a recent article in Chief Investment Officer. At a recent meeting with the investment committee, legislative representative Dane Hutchings cited a CalPERS report showing that 180 of 449 participating cities and towns had an individual… Read More

Small College Endowment Outperforms Harvard by Indexing

Bill Abt, who oversees the $120 million endowment of Carthage College in Kenosha, Wisconsin, “has returns that beat Harvard’s $37 billion endowment and most others,” according to a recent article in Bloomberg. “In the 10 years through the most recent college fiscal year, ended on June 30, 2017,” the article reports, “the former beer company executive racked up a 6.2 percent average annual return, according to the school.” Based on data from the National Association of… Read More

Yale Says its Endowment “Crushes” Indexes

The 2017 Yale University annual report argues in favor of active management strategies used by the investment offices of the country’s ivy league schools, according to a recent article in Institutional Investor. In the report, Yale rebuts Warren Buffett’s suggestion–stated in his 2016 letter to Berkshire Hathaway shareholders, that endowments and other institutional investors would be better off investing in an index like the S&P 500—by claiming that the top ten U.S. university endowments “amaze,” and… Read More