Poor Little Rich Schools

Well that worked out well.

For the last ten years we’ve listened to Ivy League endowment managers discuss the value of timberland investments, private equity, and venture capital. While these approaches aren’t available to the average shareholder, many wondered if the combination of asset size and longer time horizons meant that school endowments weren’t working with a permanent advantage.

Well it didn’t work out that way. While the market is well off its March lows, private equity and real estate haven’t recovered yet. Many schools have been forced to borrow money and lay off staff. Nobel Laureate Robert Merton of Harvard wrote a paper outlining optimal investment strategies for endowments. It’s no surprise that he notes that the endowment should be considered along with all of the school’s assets, liabilities, income and expenses. Many of the wealthiest schools didn’t do this, and now they’re under water.

World class universities often have world class investments. But the discipline of the market is no respecter of class. Or institution.

Douglas R. Tengdin, CFA
Chief Investment Officer
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By | 2014-09-04T19:03:59+00:00 July 22nd, 2009|Global Market Update|0 Comments

About the Author:

Mr. Tengdin is the Chief Investment Officer at Charter Trust Company and author of “The Global Market Update”. The audio version of each post can be heard on radio stations throughout New England every weekday. Mr. Tengdin graduated from Dartmouth College, Magna Cum Laude. He received his Master of Arts from Trinity Divinity School, Magna Cum Laude and received his Chartered Financial Analyst (CFA) designation in 1992. Mr. Tengdin has been managing investment portfolios for over 30 years, working for Bank of Boston, State Street Global Advisors, Citibank – Tunisia, and Banknorth Group. Throughout his career, Mr. Tengdin has emphasized helping clients manage their financial risks in difficult environments where they can profit from investing in diverse assets in diverse settings. –
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