NYT's Stewart: Abilene Christian, Spalding U Out-Invest Yale

Friday, 15 Nov 2013 07:26 AM

By Dan Weil

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Yale University has long been held up as the model for endowment investing, but the Ivy League stalwart was beaten out by relative unknowns Abilene Christian University and Spalding University for the five years ended June 30, 2012, according to New York Times columnist James Stewart.

Abilene Christian is based in Abilene, Texas, and Spalding is based in Louisville, Ky.

Abilene Christian's endowment generated a five-year annualized return of 9 percent, while Spalding had a return of 8 percent. In contrast, Yale's five-year return was just 3.1 percent.

Editor’s Note:
Obama Donor Banned This Message (Shocking)

Yale's model includes heavy investing in hedge funds and private equity.

Spalding doesn't own any alternative assets. "We never had that luxury," the university's president, Tori Murden McClure, told Stewart.

"We've just tried to go with a low-cost, plain-vanilla approach and grow the endowment as much as we can."

That "plain vanilla" approach consists of target allocations of 70 percent to stocks and 30 percent to fixed income.

Meanwhile, Abilene Christian has benefited from a 20 percent allocation to energy.

"The icing on our cake is the energy exposure," Jack Rich, the university's chief investment officer, told Stewart. "We have energy people on our board and the investment committee."

In the 2013 budget year, college endowments experience double-digit investment returns of an average of 11.7 percent, Inside Higher Ed reports. During the 2012 budget year, university endowments lost 0.3 percent.

Kenneth Redd, director of research and policy analysis at NACUBO, said college business officers are not really rejoicing about the 2013 gains because they know their 10-year average return is 7.1 percent.

"In the long term, it's OK, but not great: you really do need long-term growth to keep the endowment to last into perpetuity," he told Inside Higher Ed. "Treading water is better than shrinking but it's not as good as growing."

Editor’s Note: Obama Donor Banned This Message (Shocking)

Related Stories:

Harvard Loses $1 Billion Doing What Many Individuals Are Trying to Do

Harvard's Endowment Surges 11.3 Percent to $32.7 Billion

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