28/01/2009

Endownments lost 23% in late 2008

US university endowments’ investment returns fell 23% from July to November 2008, according to a survey produced by the National Association of College and University Business Officers (NACUBO). For the fiscal year ending 30 June 2008, higher education endowments in the US returned an average of -3%.

NACUBO’s annual survey includes data to the end of June 2008 from 796 colleges and universities in the United States and Canada. The follow-up survey, covering July to November 2008, includes 435 institutions that responded to the original study.

The size of an endowment’s allocation to hedge funds is directly correlated to its overall assets, with larger endowments allocating a larger percentage of assets to hedge funds than smaller endowments, according to the annual study.

Endowments with assets of more than $1bn invested 22.6% in hedge funds to the end of June 2008. This was up from 20.5% for the endowments of the same size in the previous year. Endowments with assets between $500m to $1bn invested 19.2% to hedge funds; with assets $100m to $500m, 16.4%; with assets of $50m to $100m, 11.5%.

When it came to performance, only endowments with over $1bn reported a positive rate of return to the end of June 2008, up 0.6%