Endowments feel the heat

Tue Sep 1, 2009



US universities have been unable to advance their hedge fund portfolios


By Susan Barreto

US universities learned the lesson of liquidity in 2008 in the hardest way possible - within both their private equity and hedge fund portfolios.

The five largest US university endowments - Harvard University, Yale University, University of Texas Investment Management Company, Stanford University and Princeton University - account for nearly $90 billion in combined assets after losing at least $33 billion since the middle of 2008.

Endowments, the seed capital for the hedge fund industry's best and brightest, will likely be unable to invest with new talent over the near term. But the story isn't one of the hedge fund losses and redemptions, it's more of a story centred on finding the new "endowment model" that will continue to fuel campus projects and take stakes in innovative investment strategies.

The endowment model that emerged in the 1990s was based significantly on hedge fund and private equity allocations. In most cases...

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