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Tuesday, September 22, 2009

Even Yale Lost its Superman: Endowment loses 25%

*nobody was spared. Except me, +48%.
Yale Endowment Posts a 25% Loss
University, Latest to Feel the Pressure, Blames Its Real-Estate InvestmentsArticle
Yale University, regarded as the most innovative college investor of recent decades, posted an annual investment loss of 25% in its latest fiscal year, putting an exclamation point on a period of downturns in U.S. campus fortunes.
Yale blamed its losses on big bets on real estate and commodities during the wider downdraft in investments of all kinds.

Harvard, Yale Big Investing Losers MIT Endowment Off by 21% Columbia Endowment Falls 21% Yale's strategy, favoring illiquid investments such as timber, had until this past year generated chart-topping returns. But, in the year ended June 30, Yale lagged behind the median large endowment's loss of 18%, according to investment consultant Wilshire Associates.
In a statement Tuesday, the New Haven, Conn., school pointed to the dismal performance of the largest portion of the endowment, which it calls "real assets" -- including real estate, commodities and timber -- which fell 34%. Energy investments alone dropped 47%.
The school's private-equity holdings in leveraged buyouts and venture capital posted a 24% loss. By contrast, Yale's more-conventional holdings in marketable securities, including stocks and bonds, held up better, declining 13%.
The poor recent performance of Yale's alternative investments has led some critics to question its widely emulated approach, which has turned the university's endowment manager, David Swensen, into an investment guru. He declined to comment.
Harvard University, which uses a similar strategy and reported a 27% annual loss in the same year, has said it is taking steps to reduce its endowment risk.
In the statement, Yale made no mention of changing strategy. Instead, the university noted its endowment, even after the recent decline, had posted an annualized return of 12% in the 10 years ended June 30. The school said performance over the same period surpassed the annual loss of 1.2% for U.S. stocks and the 6%-a-year gain for U.S. bonds.

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