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Feb 3, 2010 10:31 am

The National Association of College and University Business Officers released its analysis of the financial performances of the endowments at 842 institutions which have a combined $306 billion in assets. The report compared figures for the fiscal ending mid-2009 to those for the mid-2008 period. The average endowment lost 18.7% of its value, net of fees, between July 1, 2008 and June 30, 2009.


NACUBO President and Chief Executive Officer, John D. Walda, commented on the drop by saying, “These results illustrate the extreme difficulties colleges and universities faced at the height of the global economic crisis.”



24/7 Wall St. has analyzed the data for all 842 institutions and made comparisons based on 1) absolute dollar gain and loss, 2) percentage gain and loss, 3) greatest percent and absolute dollar gains and losses at the largest endowments (those with over $1 billion under management) with a special focus on those that lost 5% more than the average endowment in the survey or 23.7%, and 4) colleges and universities with endowments of more than $300 million which outperformed the average endowment loss of 18.7% by 5%–that is, those which had percentage losses of 13.7% or less.


Based on this analysis, 24/7 Wall St. picked the 20 worst managed university and college endowments and the 17 best. There were not enough colleges and universities to make a list of the 20 best based on our criteria. 24/7 also picked a “best of class” of endowments of more than $100 million which had absolute percentage gains over the one year period. Only 33 endowments of any size in this group of 842 had positive gains.


Harvard was, by a wide margin, the worst managed endowment based on both percent and absolute dollar loss among the large funds. This is particularly ironic because Harvard promoted the brilliance of the people who ran its fund to both alumni and the press. The University has now been forced to cut some of its essential services and close many buildings during January. Undergraduates are no longer served hot breakfast.


Harvard’s endowment is the largest and has lost the most in absolute dollars. In addition, it has one of largest declines in percentage terms. Duke and Yale each did almost as poorly as Harvard.


The best-managed endowments include Washington State, Pepperdine, the University of South Carolina and the University of Massachusetts.


The 24/7 Wall St. 2010 Best And Worst Managed University Endowments—-The lists:




The 20 Worst Managed Endowments:
1) Harvard, down 30% and $10.9 billion
2) Yale, down 29% and $6.5 billion
3) Duke, down 28% and $1.7 billion
4) Brown, down 27% and $730 million
5) Syracuse, down 33% and $327 million
6) University of Minnesota, down 27% and $312 million
7) Cornell, down 26% and $1.4 billion
8) University of Southern California, down 26% and $918 million
9) California Institute of Technology, down 26% and $483 million
10) Grinnell, down 27% and $396 million
11) Yeshiva, down  27% and $365 million
12) Southern Methodist, down 26% and $370 million
13) Georgia Tech Foundation, down 26% and $329 million
14) Baylor School of Medicine, down 33% and $360 million
15) University of Illinois, down 26% and $296 million
16) Pomona, down 26% and $460 million
17) Carnegie Mellon, down 29% and $313 million
18) University of <NOBR id=itxtnobr_18_0 style="FONT-WEIGHT: normal; FONT-SIZE: 100%; COLOR: darkgreen">Delaware, down 25% and $332 million
19) Northwestern, down 25% and $1.8 billion
20) Rockefeller University, down 24% and $491 million



The 17 Best Managed Endowments:
1. Washington State University, down 9% and $59 million
2. Virginia Tech, down 14% and $78 million
3. University of Utah, down 14% or $81 million
4. North  Carolina State U And Foundations, down 15% and $81 million
5. College of William and <NOBR id=itxtnobr_5_0 style="FONT-WEIGHT: normal; FONT-SIZE: 100%; COLOR: darkgreen">Mary, down 15% and $85 million
6. Pepperdine, down 4% and $27 million
7. Dalhousie, down 14% and $50 million
8. Georgia Institute of Technology, down 8% and $27 million
9. McGill, down 13% and $118 million
10. University of Missouri, down 14% and $143 million
11. University of Alberta, down 12% and $90 million
12. Berry College, down 14% and $89 million
13. University of California—SF, down 6% and $30 million
14. University of Manitoba, down 13% and $42 million
15. Texas Tech, down 14% and $113 million
16. University of South Carolina and Foundations, down 8% and $34 million
17. University of Massachusetts, down 5% and $19 million


Best of Class Endowments
1. University at Buffalo
2. VMI
3. University of Victoria BC
4. Victory University/Toronto
5. Utah State


 
Feb 3, 2010 11:30 am

This is great, but I am suspecting that some of the "Best" managed funds don't even come CLOSE to Yale and Harvard the past 20 years.  At the end of the day, it's about total dollars accumulated over time, not just one year's results.  If UMass only lost 5%, chances are they had a VERY conservative investment style.  So maybe they normally average a 6% gain per year.  Compare that to Yale which has done well into the double-digits for decades, you can see which one is "better" managed.

Feb 3, 2010 11:42 am

Well don't some of the brightest minds in the world manage these funds ? Are you guys telling me that they missed timing the market ? That can't be right ! There are guys on this site who trade in and out with great success !

Feb 3, 2010 11:49 am

It can't be that hard to time the market with a $10.9B portfolio...ohh wait....you are the market (pretty much).

Feb 3, 2010 12:02 pm

I also think a lot of endowments saw what Yale and Harvard did(after all the media coverage) and got into things they didn't know. Also how many proteges from harvard and yale are now running an endowment.

 
The last thing to keep in mind is that the yale and harvard portfolios have between15-35% in private investments, these are hard to gauge the current value in these market conditions and because of the amount of money they are managing they can afford to wait longer than the average investor..
 
Also if you are taking mid 2008-mid 2009 you are taking returns right at the heart of the market crash through part of a 2009 recovery...
 
As always numbers are deceiving
Feb 3, 2010 12:06 pm

Not to mention that at Harvard and Yale, students manage a large portion of the endowment.  

Feb 3, 2010 12:43 pm

Yale and Harvard (and others) manage their endowment with a much different focus than individuals.  Their time horizon is forever.  So much of their endowments are wrapped up in illiquid alternatives like private partnerships, REITs, timber, currencies, hedge etc.  So in order to maintain that exposure, they have to accept some wide swings that they cannot avoid.  And in all reality, the value of some of those illiquids are not as bad as they appear on paper.  But again, you accept some of those swings for much greater returns over very long periods of time.

Feb 3, 2010 12:44 pm

Really?  I did not know that.  How much and what do they do?

Feb 3, 2010 2:01 pm

Whoever wrote that article is insane.  Worst managed?  Yeah, thats why Swensen is followed like a God.  No one comes close to his long-term track record - no one.

Feb 3, 2010 3:25 pm

They all lost money because they don't know what they're doing. No different than the money manager clowns most of the advisors in this business hand their money to. They are buy side biased and hold on to the broken buy and hold effecient frontier model for dear life! That the S&P 500 has returned less than zero over the past ten years is lost on this group. Of course they all lost money! How else could it go for this group following the same flawed investment schemes?

Feb 3, 2010 4:06 pm

BG, with all due respect, are you talking about the Swensens of the world? And half the large endowment managers are his disciples. Have you actually read much about some of their strategies? I wouldn't classify them as "buy side buy and hold EF" managers. Maybe we're not talking about the same people.

Feb 3, 2010 5:04 pm

Yale down 29%. That's swenson, right? Why did he lose money? Did he mean to lose 6.5 billion?

 
 
 
Feb 3, 2010 5:16 pm

BondGuy, do you think you could garner 14-15% returns for the last 26 years?  With lower volatility than the S&P 500? 

 
No?  Swensen did.  And by the way, he doesn't prescribe to efficient market theory either.
Feb 3, 2010 5:35 pm
etj4588:

BondGuy, do you think you could garner 14-15% returns for the last 26 years?  With lower volatility than the S&P 500? 

 
No?  Swensen did.  And by the way, he doesn't prescribe to efficient market theory either.



Not being sarcastic, but does anybody? It's like bashing the KKK or something. Way to take a stand on a controversial issue...

In fact, it seems to be very 'en vogue' to bash the EMT.

Feb 3, 2010 5:45 pm
SometimesNowhere:

Not being sarcastic, but does anybody?

 
 
Uh... John Bogle?
Feb 3, 2010 5:52 pm
etj4588:
SometimesNowhere:

Not being sarcastic, but does anybody?

 
 
Uh... John Bogle?



Didn't realize he was still alive.

Feb 3, 2010 6:36 pm

What is the Efficient Market Theory?

Feb 3, 2010 9:39 pm
BondGuy:

Yale down 29%. That's swenson, right? Why did he lose money? Did he mean to lose 6.5 billion?

 
 
I'd rather hire the guy that made "B's" for me, not "M's".  Have you seen his historical returns?? 
 
"Mr. Swensen's fame comes from his oversight of Yale University's $15 billion endowment fund, which, since he was hired 22 years ago, has returned an average of 16% a year, far outpacing the market and other funds run for universities."
 
If my math is correct, he has created close to $13B in value in the endowment.  And it must have started somewhere in the vicinity of $1B when he started.
 
Put it in real terms...could you take someone's account from $1mm to $15mm in 22 years, while taking out 4.5 - 6% per year?  Just curious.
 
Feb 4, 2010 12:05 pm
B24:
BondGuy:

Yale down 29%. That's swenson, right? Why did he lose money? Did he mean to lose 6.5 billion?

 
 
I'd rather hire the guy that made "B's" for me, not "M's".  Have you seen his historical returns?? 
 
"Mr. Swensen's fame comes from his oversight of Yale University's $15 billion endowment fund, which, since he was hired 22 years ago, has returned an average of 16% a year, far outpacing the market and other funds run for universities."
 
If my math is correct, he has created close to $13B in value in the endowment.  And it must have started somewhere in the vicinity of $1B when he started.
 
Put it in real terms...could you take someone's account from $1mm to $15mm in 22 years, while taking out 4.5 - 6% per year?  Just curious.
 
 
OK, your a fan. Fair enough! But, with the market almost straight up from 83 to 2000 how hard was it to create that wealth? Sorry, i'm not impressed.
 
This guy lost 29%. Why is that? Certainly he had the analytics available to him to enable him to get the endowment off the tracks, or to hedge it against decline. Yet, he did neither. Why? Or, more importantly, the BOD or governors running the school should ask this question: What are you doing to protect us when this happens again?
 
 
 
You can't lose 30% of your assets and still claim the title money management genius.
Feb 4, 2010 12:19 pm

Agree.. Swenson farms out most of the money...He manages very little..