Schools Make Hedge Funds Well-Endowed

The 53 largest universities have pumped a total of $40 billion into the industry over the past five years. According to a the latest InvestHedge Billion Dollar Endowment Club report, this group – which manage a total of $217 billion AUM – have an average of 20% of their assets in hedge funds. The report found that 77% of all schools with assets of more than $1 billion invest in hedge funds, with about 50% of them putting money directly into HFs rather than in funds of hedge funds. Among the biggest investors in hedge funds in this group, according to InvestHedge are Columbia University, Harvard University, Massachusetts Institute of Technology, PrincetonUniversity, StanfordUniversity, University of Chicago, University of Notre Dame, University of Virginia and YaleUniversity.

Other findings include:

--Harvard has the most money invested in hedge funds $5 billion – which is about 16% of its total $29.2 billion AUM.

--The University of Virginia has the highest allocation to hedge funds – 51.7% ($176 billion) – followed by the University of Richmond with 45% of its total $1.4 billion.

--Amherst College, Brown University, Columbia and the Notre Dame invest more than 30% of their total assets in hedge funds.

--Yale’s endowment fund returned 22.9% this year, thanks in part to gains in HF strategies that grew 13.1% annually for the decade ending June 2005.

--Stanford had the top performing HF portfolio with annualized returns of 17% as of fiscal year 2005.

The average annual return for endowments with $1 billion AUM is 15.34%. Says InvestHedge Deputy Editor Susan Barreto, "The behind-the-scenes presence endowments have had in the evolution of hedge funds shows the innovation of university investment offices that often goes unnoticed. Hedge funds enjoy a symbiotic relationship with the likes of Harvard, Yale and Sanford that is fruitful for all types of institutional investors."