How universities manage their investments

I enjoy reading about the strategies taken by universities in managing their billion dollar endowments. There was an article in yesterday’s Daily Tar Heels about recent moves by UNC Management Company, the company in charge of managing the $1.4 billion UNC Chapel Hill Foundation Investment Fund. According to president Jon King, their strategy is to “find asset classes that are not the hot assets today — ones that may be a little bit out of favor — but still significant aspects of the economy.”  They did just that five years ago by investing in the energy and natural resources sector, which at that time was considered unattractive. Their investment paid off and returned a 45.7 percent gain in the 2004-2005 fiscal year.

 

The article also talked about investment strategies taken by neighboring schools. Some schools own positions in forests, which make money by periodically cutting down subsections and selling the timber. I know that Harvard University, which has the largest academic endowment, owns forest in New Zealand. The article mentions that it, along with Wake Forest University, own forest in the Pacific Northwest.

 

And in case anyone is keeping track, Yale has the second largest academic endowment with $13 billion, the University of Chicago has $3.6 billion, the University of Virginia has $2 billion, and Wake Forest at $1.1 billion.

 

7:40pm update: I found this article bookmarked on my computer about Yale's endowment's stellar return in the most recent fiscal year.

 

"Yale University's David Swensen, who oversees the school's $15.2 billion endowment, produced the highest returns among managers at the richest U.S. universities, beating his competitors at Stanford and Harvard with investments in hedge funds, real estate and private equities."