Big University Foundations Yield Big Alt Returns

Posted by on January 24, 2006 at 3:41 pm.

The National Association of College and University Business Officers (NACUBO), together with TIAA-CREF, just announced a study of university foundation returns across the country. The big takeaway: large Foundations from $100M to $500M to $1B, got larger with good alternative asset allocations.

While the smallest colleges relied upon low-risk/liquid Public Equities and Fixed Income investments, the big boys put 15%-35% of their funds in alternative assets (e.g. hedge funds, venture capital) and reaped the rewards of diversification and long-term illiquid investing. Whereas the smaller foundations garnered single digit returns, some of the largest ones yielded 22% (one year), 14% (five year) and 17% (ten year) returns.

This is noteworthy on a national level, but particularly interesting as Florida’s large universities consider capital campaigns, tech transfer and overall national relevance.

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