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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

#21

Post by mishchea »

SilasX wrote: post #13
andmis wrote: post #9

Is 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.

If they did show that data, it would look worse. On average, universities don't outperform (far lower-cost) index funds with similar objectives, per the recent HN story: https://news.ycombinator.com/item?id=11202349

The article focuses on universities' investments in hedge funds specifically. The numbers in the article suggest that on the high end, about 10–20% of an endowment will be in a hedge fund.

The question I have is, what are the typical returns just on that 10–20% investment?

The endowment can do poorly (as bad as or worse than an index fund) as a whole, even if the investment into hedge funds is paying out well.

Re: Universities Are Becoming Billion-Dollar Hedge Funds with Schools Attached

#22

Post by hiddencost »

lr4444lr wrote: post #12

Sidenote, and I may get down-voted heavily for saying this, because he's got plenty of "cred" on so many different fronts, but Noam Chomsky always struck me as a hypocrite when it came to his economic and political thinking for taking a pension supported by the $13 billion MIT endowment, which is surely generating money through many of the practices disparaged both in this article and Chomsky's own beliefs.

Hypocrisy is such a boring & irrelevant criticism in most contexts. His critical theory is much more important than his practice. He has to survive in the world that exists, not the one he wishes existed. There's really minimal value in such a symbolic gesture as rejecting a pension, and criticizing his ideas on such irrelevant grounds takes away from actually talking about the issues raised.

Re: Universities Are Becoming Billion-Dollar Hedge Funds with Schools Attached

#23

Post by avar »

lr4444lr wrote: post #20
Mikeb85 wrote: post #15

Earlier quoted context omitted.

So does that mean no one's allowed to criticize their employer? Or to encourage them to do better? Besides, I doubt his pension is much more (if any) than is typical in his profession...

That's my point: I hear him criticizing the military industrial complex, but I haven't heard of him penning a letter to the MIT Board of Trustees, soliciting the support of current and emeritus faculty to join him as the undersigned, to divest from Northrop Grumman, Lockheed Martin, and the like. If I've missed it, do point me to it and I'll recant.

I don't think he's done that, but what possible use would that be even if it work? Talk about raging against the smallest possible cog in the machine.

He objects to the present practices of the US military industrial complex, if he managed to make MIT not take their money someone else would and nothing would change.

Trying to do this via MIT's budget would be a pointless distraction to achieving his stated goals.

Re: Universities Are Becoming Billion-Dollar Hedge Funds with Schools Attached

#24

Post by Mikeb85 »

lr4444lr wrote: post #20
Mikeb85 wrote: post #15

Earlier quoted context omitted.

So does that mean no one's allowed to criticize their employer? Or to encourage them to do better? Besides, I doubt his pension is much more (if any) than is typical in his profession...

That's my point: I hear him criticizing the military industrial complex, but I haven't heard of him penning a letter to the MIT Board of Trustees, soliciting the support of current and emeritus faculty to join him as the undersigned, to divest from Northrop Grumman, Lockheed Martin, and the like. If I've missed it, do point me to it and I'll recant.

Fair enough. Noam Chomsky says a lot of things, I would have figured he'd have criticized his employer at least a few times. A quick search finds he has criticized universities for various things...

Re: Universities Are Becoming Billion-Dollar Hedge Funds with Schools Attached

#25

Post by pklausler »

lr4444lr wrote: post #12

Sidenote, and I may get down-voted heavily for saying this, because he's got plenty of "cred" on so many different fronts, but Noam Chomsky always struck me as a hypocrite when it came to his economic and political thinking for taking a pension supported by the $13 billion MIT endowment, which is surely generating money through many of the practices disparaged both in this article and Chomsky's own beliefs.

I read this comment, and then the article, and was surprised that it was not written by Chomsky and didn't even mention him. So why bring him up?

Re: Universities Are Becoming Billion-Dollar Hedge Funds with Schools Attached

#26

Post by toomuchtodo »

c0g wrote: post #18
toomuchtodo wrote: post #7

Earlier quoted context omitted.

What if university endowments were used to fund research and implementation into ways to drive down the cost of education to zero?

Because whatever the idea is, it probably won't work and then there wont be free education or any money.

I find your comment ironic on a forum sponsored by an entity that funds "creative destruction" of existing market spaces.

Re: Universities Are Becoming Billion-Dollar Hedge Funds with Schools Attached

#28

Post by chishaku »

ThrustVectoring wrote: post #16
lr4444lr wrote: post #12

Sidenote, and I may get down-voted heavily for saying this, because he's got plenty of "cred" on so many different fronts, but Noam Chomsky always struck me as a hypocrite when it came to his economic and political thinking for taking a pension supported by the $13 billion MIT endowment, which is surely generating money through many of the practices disparaged both in this article and Chomsky's own beliefs.

>"Divestment is likely to have negligible financial impact on the affected companies. And such a strategy would diminish the influence or voice we might have with this industry." http://www.harvard.edu/president/news/2013/fossil-fuel-dives...

"The evidence from South Africa suggests that divestment, while ineffective in a financial sense, can have an impact by shaping public discourse. If universities across the country divested from fossil fuels, this would again be the case."

http://www.iop.harvard.edu/does-divestment-work

Re: Universities Are Becoming Billion-Dollar Hedge Funds with Schools Attached

#29

Post by hackuser »

lr4444lr wrote: post #12

Sidenote, and I may get down-voted heavily for saying this, because he's got plenty of "cred" on so many different fronts, but Noam Chomsky always struck me as a hypocrite when it came to his economic and political thinking for taking a pension supported by the $13 billion MIT endowment, which is surely generating money through many of the practices disparaged both in this article and Chomsky's own beliefs.

It's a useful point that Chomsky benefits from the same system, but,

1) Generally everyone is part of the system they criticize. The other choice is to go off the grid, in which case you would never hear their opinions. What was the last thing you read by one of those non-hypocritical people?

2) For that and many other reasons, including that we all are fallible humans, everyone is a hypocrite including you and including me.

Re: Universities Are Becoming Billion-Dollar Hedge Funds with Schools Attached

#30

Post by hackuser »

I generally don't support endowments. The ROI seems very poor: Only interest on the investment will be used for the cause you are supporting, and it will be for undetermined purposes in perpetuity. Also, a permanent source of funding could be a very serious problem, creating a disincentive to change.

If you were investing for personal profit rather than to support a cause, would you even consider an investment that offered those terms? Even fixed rate investments return your principal eventually.

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