Many college endowments recouped some of their losses in the 2012 accounting period by reducing alternative investments.
A report on college investments and funding says United States college endowments are cutting alternative investment holdings in an attempt to recoup record losses from the last four years.
The National Association of College and University Business Officers and the Commonfund Institute issued a report that colleges on average allocated 47 percent of their investment portfolios in alternative assets such as private equity for the 12-month period ending in June. That was a reduction from 54 percent for the year before.
According to the report, which studied data from 461 colleges, the reduction “may indicate a pause in the long-term trend of growth’’ in alternative investments such as private equity and hedge funds.
The NACUBO-Commonfund study showed that colleges posted an average endowment investment return of 11.7 percent in the year ending in June, as a recovery from the previous year that saw a 0.3 percent loss. Domestic equities showed a return of 20.5 percent while alternative investments produced a return of 8.6 percent, according to the study.
Bloomberg reports that Harvard and other wealthy schools expanded their holdings of private equity prior to the economic downturn of 2008, and suffered record losses as a result that left institutions short of cash. According to Bloomberg, Harvard posted an 11.3 percent investment return in the year ending in June, and has an endowment valuation of $32.7 billion after reaching a peak of $37 billion before the recession.
The Wall Street Journal reports that Yale trimmed its investment in alternative investments such as private equity to 31 percent of their $21 billion endowment, down from 35 percent. The Yale endowment fund reportedly lost approximately one-fourth of its total in the economic downturn.
Kent McDill is a staff writer for Millionaire Corner. McDill spent 30 years as a sports writer, working for United Press International and the Daily Herald of Arlington Heights, Ill. From 1988-1999, he covered the Chicago Bulls for the Daily Herald, traveling with them every day through the nine-month season. He also covered the Bulls for UPI from 1985-88, and currently covers the team for www.nba.com. He has written two books on the Bulls, including the new title “100 Things Bulls Fans Should Know And Do Before They Die’, published by Triumph Books. In August 2013, his new book “100 Things Bears Fans Should Know And Do Before They Die” gets published.
In 2008, he resigned from the Herald and became a freelance writer. The Herald hired him to write business features and speeches for the Daily Herald Business Conferences and Awards presentations.
McDill also writes a monthly parenting column for the Herald’s Suburban Parent magazine.
McDill is the father of four children, and an active fan of soccer, Jimmy Buffett and all things Disney.