Big University Endowments Hampered by Startup Write-Downs (wsj.com) 34
The hangover from the bursting of the startup bubble is weighing on big U.S. university endowments, with write-downs in their growth and venture-capital investments driving a second straight year of weak returns. From a report: The Massachusetts Institute of Technology reported a loss of 2.9% and Duke University, a loss of 1% for the fiscal year ending June 30, while endowments at Yale and Stanford gained 1.8% and 4.4%, respectively. The median return for endowments and foundations of more than $1 billion was 5.6%, according to a preliminary estimate from Cambridge Associates.
That was well behind the overall stock market. The MSCI All Country World Index and the S&P 500 gained 17.1% and 19.6% for the period, including dividends, respectively. They were boosted by the rally in tech giants including Microsoft and Nvidia that have benefited from developments in artificial intelligence. Small endowments of less than $500 million, which typically have less exposure to private investments and more to public equities, had a median return of 8.8%, according to Cambridge. "You were at the mercy of portfolio construction," said Matt Bank of Charlotte, N.C.-based Global Endowment Management, an outsourced investment firm. "Those decisions drove your short-term results, and the specific decisions you made within categories mattered less." Exposure to China also had a negative impact on returns, several endowment chiefs said.
That was well behind the overall stock market. The MSCI All Country World Index and the S&P 500 gained 17.1% and 19.6% for the period, including dividends, respectively. They were boosted by the rally in tech giants including Microsoft and Nvidia that have benefited from developments in artificial intelligence. Small endowments of less than $500 million, which typically have less exposure to private investments and more to public equities, had a median return of 8.8%, according to Cambridge. "You were at the mercy of portfolio construction," said Matt Bank of Charlotte, N.C.-based Global Endowment Management, an outsourced investment firm. "Those decisions drove your short-term results, and the specific decisions you made within categories mattered less." Exposure to China also had a negative impact on returns, several endowment chiefs said.
tuition can go up the umlimted student loans will (Score:2)
tuition can go up the umlimted student loans will cover it
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The universities with really large endowments usually also have a low percentage of students taking out loans. The universities that contribute most to student loan debt are less selective schools with low matriculation rates. These schools are financially on shakier ground (no big endowment) and are happy to take the tuition money of a student with a less than stellar HS resume.
High risk means you sometimes lose (Score:3)
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Agreed. This is pretty much a non-story.
What always surprises is that people managing these enduring funds don't see some of the more obvious things happening in the market. Like, I get that your job is to maximize the return on your stock gambles, but like endowments fund programs based on gains, not capital, so shouldn't the first goal be to not lose what you have?
It's one thing for your investments to drop 1% when the market as a whole is down 1%, but it's kind of a big screw up for your entire fund lose
Re: High risk means you sometimes lose (Score:2)
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It's been a while but I remember reading how well the endowments have historically performed [ucarecdn.com] - this shows some of the
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I think this started because many of the startups began at the universities, so the pairing made more sense. Now there's a desire to invest in startups that have little relationship to the university. Further, in the past the startups often had a proposal and plan that were reasonable, with a desire to be successful; today's startups are often just have a goal to get bought out, make the founders some money despite the product ultimately being a failure.
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Most endowments have some percentage of their money in VC Funds and alternative investments. It sounds like they are all well diversified though; that should be their primary measure.
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so yea, sometimes you draw the short stick
Man if I had a time machine, I'd send you back to 2007 during the Banking Crisis. Or the whole auto bailout. Or the whole PPP thing. Or the other times where the short stick was covered by taxpayers.
We don't have any of that free market bullshit in the US. The endowment funds are just trying to get on that gravy train the airlines got on.
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The PPP program was loan-based, so that's not much of a bailout but more of a government wrecks your stuff with regulation, there had to be some restitution. What was a bailout in the past few years is once again the failing banks, as if Biden didn't learn when his predecessors did it, he bailed out the banks resulting in economic stagnation as the money has been sucked out of the market by the government. Had the banks failed, those companies like Microsoft, Meta etc may not be as well off today having los
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If startups were guaranteed to make same or more money than the market, everyone would be investing in them.
This is not true. Startups get to pick their investors, and most individual investors have no access to startups. This is especially true for the startups that are "guaranteed to make money."
Eating their own dog food & discovering it's a (Score:2)
Sounds like these universities produce graduates who start companies that lose money.
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Nope. That's not how these institutional investors invest.
With the size of those endowments, that may be more classified as hoarding, not merely investing. That's one hell of a dignity penalty represented on the graduate balance sheet, sometimes chained to a degree of questionable societal value weighing in at a small mortgage.
Are they even technically universities any longer? (Score:5, Insightful)
Many of these places are basically international hedge funds that happen to also own classroom buildings.
For many others, they are professional sports franchises that also happen to own the apartment buildings their players reside in.
how long before they just sell degrees with no cla (Score:2)
how long before they just sell degrees with no class needed?
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Have you been to a college recently? MIT, Yale, Stanford, Harvard, if you're of the proper class, you can just write an essay how oppressed you feel and you pretty much get a Cum Laude PhD.
Re: how long before they just sell degrees with no (Score:2)
Guruevi's mom teaches Cum Louder classes.
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The obvious lesson here (Score:2)
If you want safe and dependable income, don't put your money into risky investments.
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They? Who? The Jews? Always their fault, isn't it, eh?
Top law firms rely on discretion: law firms represent the client and only the client. They do not have opinions. Those students just very, very, very publicly shouted that they don't have much discretion. They are absolutely allowed to do that.
But you know if you shout out something very loud and kinda dumb, a company that prides itself on hiring smart, quiet people isn't going to be so keen.
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They? Who? The Jews? Always their fault, isn't it, eh?
They the law firm that canceled the job offer. "They" the people the student targeted and tried to intentionally piss off. If they happen to be Jews, well *shrug*. As you point out, for equal parts of "fuck around" you'll get a direct measure of "find out" and it's 100% legal.
Oh noes! The horror! (Score:2)
Who pays the student loans? (Score:2)
I can see why universities are getting skittish:
1: They raised tuition costs so much that it is difficult for a family to afford the tuition or create a fund.
2: A lot of parents, due to how easy it is to get in trouble, have bail funds, not tuition funds. Just talking out of turn in some secondary can mean a trip to juvi.
3: People see that there will be zero help with student loans, and it means that they will be shackled with immense non-dischargable amounts of debt for life.
4: Many universities get t
A microscopic quartet of violins, plays. (Score:2)
The Massachusetts Institute of Technology reported a loss of 2.9% and Duke University, a loss of 1% for the fiscal year ending June 30, while endowments at Yale and Stanford gained 1.8% and 4.4%, respectively. The median return for endowments and foundations of more than $1 billion was 5.6%...
As the majority of debt-riddled college graduates would struggle to afford an unscheduled car repair of $400 or more, I want all of us to really think about this fact with their damn tuition costs. Kinda tough to try and understand that unique dialect of poor-mouth coming from those bitching about mediocre returns or minor losses with those balances. Not when taxpayers might be bailing out degree holders in droves.
(Finance Chair) "Hampered? I take it you're referring to where we tell the maids to put
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Those are all private universities and chances are those endowments can only be used for very specific purposes. Well at least the principal. That leaves the schools to just the interest to spend which is still a lot of money.
These are the same schools with super expensive tuitions and some very high salaried administrators, coaches, etc.
Compare them to the public universities and colleges that don't have big names and endowments to fund their 'ventures'.
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Those are all private universities and chances are those endowments can only be used for very specific purposes. Well at least the principal. That leaves the schools to just the interest to spend which is still a lot of money.
These are the same schools with super expensive tuitions and some very high salaried administrators, coaches, etc.
Yes, a public has become keenly aware of the "administrators" problem that has become quite infamous now on college campuses. I doubt Elon Musk could hold Twitter termination statistics as the liberal gold standard anymore if he dared buy one.
One can only hope potential customers get tired of believing the product cost is justified in order to cover tenured payroll for the assistants assistant administrator to the vice sub-dean du jour working in the backup division of the department of redundancy departme
Invest in Palestine! (Score:1)
Pissing off us jooz is inversely correlated with financial success. Or so I'm told.
Study (Score:1)