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Endowments With $1B Pools Swimming In Hedge Funds

Date: Thursday, December 21, 2006
Author: Dailyii.com

The bigger the university endowment, the higher the allocation to alternative investments, according to preliminary results of a survey by the National Association of College and University Business Officers and TIAA-CREF. According to the findings, endowments with more than $1 billion in investable assets allocate nearly 10 times more to hedge funds than their smallest counterparts, endowments with $25 million or less. The spread in private equity is about the same as in hedge funds. As far as venture capital is concerned, the largest endowments slightly dipped in their allocation (3.5% down from 3.6%), while the $25 million endowments are getting their feet wet in VC for the first time with 0.2% allocation, up from zero.

Other results revealed the following:

  • The largest increase in HF allocation occurred among endowments with between $500 million and $1 billion in assets, up 1.6 percentage points to 17.4%
  • Institutions with $50 million or less boosted allocation the least, by 0.2 percentage points.
  • Overall allocations to private equity rose between 0.2 and 0.4 percentage points.
  • In addition to the largest endowments slipping in venture capital allocations, institutions in the $100 million to $500 million category, fell by .1 percentage points, while those with $25 million to $50 million slipped .2 percentage points.
  • The spread in real estate allocations between the largest and smallest institutions was the smallest 4.0% vs. 2.3%.
  • The largest endowments allocations in equity remained flat - and around double that of hedge funds - at 44.9%.