Very Interesting
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 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 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
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.
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 !
It can’t be that hard to time the market with a $10.9B portfolio…ohh wait…you are the market (pretty much).
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 deceivingNot to mention that at Harvard and Yale, students manage a large portion of the endowment.
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.
Really? I did not know that. How much and what do they do?
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.
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?
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.
Yale down 29%. That’s swenson, right? Why did he lose money? Did he mean to lose 6.5 billion?
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.[quote=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. [/quote]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.
Uh... John Bogle?Not being sarcastic, but does anybody?
Uh... John Bogle?[/quote][quote=SometimesNowhere] Not being sarcastic, but does anybody?
Didn't realize he was still alive.
What is the Efficient Market Theory?
[quote=BondGuy]Yale down 29%. That’s swenson, right? Why did he lose money? Did he mean to lose 6.5 billion?
[/quote] 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.[quote=B24][quote=BondGuy]Yale down 29%. That’s swenson, right? Why did he lose money? Did he mean to lose 6.5 billion?
[/quote] 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. [/quote] 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.Agree… Swenson farms out most of the money…He manages very little…
I used to be a big Swenson fan before I found out he did little to nothing in terms of actuall management. He and his assts just farm out 80% of the investments(of course there is some due diligence in that but not nearly the same as actually managing it) might be why he was down so bad.
Not being a Swenson groupie i don't know exactly what he does. However, farming out the management makes him no better than a ML rookie advisor and neatly explains the ML rookie like results.Agree… Swenson farms out most of the money…He manages very little…
Okay gentlemen, you guys should really read a bit more about the Yale Endowment. He does not “farm out” 80% of the work. Most is done “in house”.
The big decline came from private equity. PE is illiquid, so the losses are only paper losses for now. Honestly BondGuy, I can't believe you of all people, with this many years in the business, would judge a manager on only 1 years performance. Forgetting entirely the prior 25 years of top notch performance. Running an endowment is much different than running portfolios for clients. Endowments have no time horizon. They exist in perpetuity, so they are able to take on larger risks. The funny thing is is that PE firms like Blackstone often drastically outperform in years after a recession.First off, most endowments “farm out” the actual management. However, their role is to make the tactical decisions for the endowment, and they spend the majority of their time doing research on managers and the economy, not on whether to buy Pepsi or Coke.
I suppose Warren Buffett's a chump too. From Sept 2008 to March 2009 he lost 46%. He just buys big companies, he doesn't actually manage them.[quote=B24]First off, most endowments “farm out” the actual management. However, their role is to make the tactical decisions for the endowment, and they spend the majority of their time doing research on managers and the economy, not on whether to buy Pepsi or Coke.
I suppose Warren Buffett's a chump too. From Sept 2008 to March 2009 he lost 46%. He just buys big companies, he doesn't actually manage them.[/quote] I do think Warren is overrated... But in your example the comparison aren't equal... Buffett is buying companies, Swensen is farming out Investments... totally different... Buffet can effect change in a company, fire employees, raise/lower salaries/benefits, decrease operations etc... all Swensen can do is give more money or take it away..[quote=Squash1][quote=B24]First off, most endowments “farm out” the actual management. However, their role is to make the tactical decisions for the endowment, and they spend the majority of their time doing research on managers and the economy, not on whether to buy Pepsi or Coke.
I suppose Warren Buffett's a chump too. From Sept 2008 to March 2009 he lost 46%. He just buys big companies, he doesn't actually manage them.[/quote] I do think Warren is overrated... But in your example the comparison aren't equal... Buffett is buying companies, Swensen is farming out Investments... totally different... Buffet can effect change in a company, fire employees, raise/lower salaries/benefits, decrease operations etc... all Swensen can do is give more money or take it away..[/quote]I think Buffett is awesome, but I think you're right. People talk about his investments in companies like GE like he is buying common stock or something. There is nothing brilliant about using the leverage of having cash to demand at least a 10% return on your money.
[quote=B24]First off, most endowments “farm out” the actual management. However, their role is to make the tactical decisions for the endowment, and they spend the majority of their time doing research on managers and the economy, not on whether to buy Pepsi or Coke.
I suppose Warren Buffett's a chump too. From Sept 2008 to March 2009 he lost 46%. He just buys big companies, he doesn't actually manage them.[/quote] Look at the 13F... where are all the assets?Rainwater is way better then Swensen… So is that guy from Renasaince Tech(although he just uses math formulas so he cheats)…
[quote=Squash1]Rainwater is way better then Swensen… So is that guy from Renasaince Tech(although he just uses math formulas so he cheats)… [/quote]
James Simons… I think his ideas are unrepeatable(as evidence from the fact that he can’t repeat the performance of his Medallion Fund)…
[quote=etj4588]Okay gentlemen, you guys should really read a bit more about the Yale Endowment. He does not “farm out” 80% of the work. Most is done “in house”.
The big decline came from private equity. PE is illiquid, so the losses are only paper losses for now. Honestly BondGuy, I can't believe you of all people, with this many years in the business, would judge a manager on only 1 years performance. Forgetting entirely the prior 25 years of top notch performance. Running an endowment is much different than running portfolios for clients. Endowments have no time horizon. They exist in perpetuity, so they are able to take on larger risks. The funny thing is is that PE firms like Blackstone often drastically outperform in years after a recession.[/quote] He ran 1 bil to 16 bil in round numbers. Then gives up 30% of that in a few months? My dog was an investment genius from 88 to 2000. I had him pee on the stock page. What is there to be impressed with?[quote=BondGuy]
He ran 1 bil to 16 bil in round numbers. Then gives up 30% of that in a few months? My dog was an investment genius from 88 to 2000. I had him pee on the stock page. What is there to be impressed with?[/quote] You're right. Enough said. Wow.[quote=B24]First off, most endowments “farm out” the actual management. However, their role is to make the tactical decisions for the endowment, and they spend the majority of their time doing research on managers and the economy, not on whether to buy Pepsi or Coke.
I suppose Warren Buffett's a chump too. From Sept 2008 to March 2009 he lost 46%. He just buys big companies, he doesn't actually manage them.[/quote] Buffett's Ok, wrong, but Ok. And, he can still retire on 46% less assets. Tactically, Swenson was very overpaid. Big pic, he missed what was going on.[quote=iceco1d]Bondguy, you really hate anything related to MPT, don’t you? Efficient markets, asset allocation, all hogwash in your opinion I gather?
Now mind you, I mean implemented the way they are SUPPOSED to be implemented, not in the way they are implemented by buying an American Funds asset allocation fund or a Fidelity Target Date fund.... In other news, I'm going to be down your way (I think) this weekend...want to grab a drink? [/quote] Actually i have great respect for those who have developed the foundation for modern investing. Alfred Cowles is one I hold in very high esteem. As for MPT/efficient frontier/asset allocation/buy and hold- which of these together or seperately protected clients from aug 08 to mar 09? The answer is none. The financial advisory biz is buy side biased. Fin advisors don't get paid to sit on the side lines. They get paid to invest the money. Thus clients were left sitting squarely on the tracks when the 902 to financial destruction ran them down. Why didn't MPT pull these investors from the path of destruction? Because it doesn't work, that's why. MPT is a means to an end. The Financial advisory business wanted a scalable business. The fee acct was the answer. Just add assets and watch your revenues grow! MPT is the "story", the reason investors needed to go fee. It is the key part of the "Pitch." Add the failure to protect to the less than zero 10 year return of the benchmark portfolio anchoring S&P500 index found in most accts and ask, in who's best interest is MPT? Just who is it working for? If you answered "millions of investors", congratulations you qualify to be ML's next Private Client Group head. If you answered honestly, the firms collecting billions in revenues as their clients lose access to a secure retirement, you understand my pain.So BG, your clients didn’t lose a dime during the crises?
Its a good to be here every one. Blow your mind well and getting much bater.
Hows that and feel it well.
Have a well time.
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