Universities Are Becoming Billion-Dollar Hedge Funds with Schools Attached
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Re: Universities Are Becoming Billion-Dollar Hedge Funds with Schools Attached
#2The issue is not so much that schools invest in hedge funds (the endowment managers are just trying to maximize returns), but that the endowments pay out such a small percentage of their funds each year to support research, financial aid, and everything else. Harvard pays out only 4-6% of the endowment yearly. On their huge endowment, if they increased the payout by .5%, they would have a whole lot more to spend on worthy activities instead of saving for the year 3000.
Re: Universities Are Becoming Billion-Dollar Hedge Funds with Schools Attached
#3The issue is not so much that schools invest in hedge funds (the endowment managers are just trying to maximize returns), but that the endowments pay out such a small percentage of their funds each year to support research, financial aid, and everything else. Harvard pays out only 4-6% of the endowment yearly. On their huge endowment, if they increased the payout by .5%, they would have a whole lot more to spend on w…
History shows that world changing research and ideas are spread out over decades, if not centuries. By planning to be around in the year 3000, they're making sure that they can contribute.
Re: Universities Are Becoming Billion-Dollar Hedge Funds with Schools Attached
#4The issue is not so much that schools invest in hedge funds (the endowment managers are just trying to maximize returns), but that the endowments pay out such a small percentage of their funds each year to support research, financial aid, and everything else. Harvard pays out only 4-6% of the endowment yearly. On their huge endowment, if they increased the payout by .5%, they would have a whole lot more to spend on w…
I think saving for perpetuity is a good idea. Lots of endowment money lives for centuries in these institutions, spitting off gains- it would be selfish of a particular generation to draw this fund down excessively.
Considering long-term real rates of return on a diversified portfolio, a 4% annual withdrawal rate (the "4% rule") is advocated for most retirees- and they only have to make their nest egg last 30 years.
What sort of signal would that give to charitable givers to the university when it decides to start taking 8% per year, and seeing the money exponentially decay? I'm in no position to donate a large amount to a university, but if I were I would imagine that I would like to see it live on, not wither on the vine.
Re: Universities Are Becoming Billion-Dollar Hedge Funds with Schools Attached
#5The issue is not so much that schools invest in hedge funds (the endowment managers are just trying to maximize returns), but that the endowments pay out such a small percentage of their funds each year to support research, financial aid, and everything else. Harvard pays out only 4-6% of the endowment yearly. On their huge endowment, if they increased the payout by .5%, they would have a whole lot more to spend on w…
This is incredibly shortsighted. The point of an endowment is not to pay it off, the point is that the endowment persists indefinitely, and the interest / returns fund operations.
If people wanted to contribute directly to a university, they can. Instead they're contributing to the endowment. Respect that choice.
It's pathetic that universities have actually set up a sustainable source for funding scholarships etc indefinitely -- where spending caps are actually restricted -- and the vultures immediately descend to suck it dry and spend it off. And then in a few decades when it's gone: ???
Re: Universities Are Becoming Billion-Dollar Hedge Funds with Schools Attached
#6The issue is not so much that schools invest in hedge funds (the endowment managers are just trying to maximize returns), but that the endowments pay out such a small percentage of their funds each year to support research, financial aid, and everything else. Harvard pays out only 4-6% of the endowment yearly. On their huge endowment, if they increased the payout by .5%, they would have a whole lot more to spend on w…
> "the endowment managers are just trying to maximize returns"
respectfully, the article paints a much darker and more insidious picture than that.
Re: Universities Are Becoming Billion-Dollar Hedge Funds with Schools Attached
#7The issue is not so much that schools invest in hedge funds (the endowment managers are just trying to maximize returns), but that the endowments pay out such a small percentage of their funds each year to support research, financial aid, and everything else. Harvard pays out only 4-6% of the endowment yearly. On their huge endowment, if they increased the payout by .5%, they would have a whole lot more to spend on w…
This is incredibly shortsighted. The point of an endowment is not to pay it off, the point is that the endowment persists indefinitely, and the interest / returns fund operations. If people wanted to contribute directly to a university, they can. Instead they're contributing to the endowment. Respect that choice. It's pathetic that universities have actually set up a sustainable source for funding scholarships etc in…
What if university endowments were used to fund research and implementation into ways to drive down the cost of education to zero?
Re: Universities Are Becoming Billion-Dollar Hedge Funds with Schools Attached
#8The issue is not so much that schools invest in hedge funds (the endowment managers are just trying to maximize returns), but that the endowments pay out such a small percentage of their funds each year to support research, financial aid, and everything else. Harvard pays out only 4-6% of the endowment yearly. On their huge endowment, if they increased the payout by .5%, they would have a whole lot more to spend on w…
> "the endowment managers are just trying to maximize returns" respectfully, the article paints a much darker and more insidious picture than that.
It seems to paint the picture that they're trying maximize the money they (the managers) make, not necessarily the returns.
Re: Universities Are Becoming Billion-Dollar Hedge Funds with Schools Attached
#9Is it just me or does the article fail to mention/estimate/discuss how much money the universities received _from_ hedge funds? It repeats over and over again how much the schools _paid_ in managers' fees, but if the return was several times that amount, then I guess I don't see the problem.
Re: Universities Are Becoming Billion-Dollar Hedge Funds with Schools Attached
#10Reminds me of this charming but probably fake story about Oxford New college http://www.atlasobscura.com/places/oak-beams-new-college-oxf... On the other hand, the modern version, embracing risk and avoiding ethical standards probably won't yield the thousand year endowment they're looking for.