« Hedge funds have biggest gains since 2003 | Main | Hedge fund industry 'to continue growing modestly' »
January 12, 2007
School Endowments Invest 39% In Alternatives
For the sixth consecutive year, higher educational endowments in the U.S. have increased their allocations to alternative investments, according to the 2007 Commonfund Benchmarks Study of Educational Endowments. The research found that respondents allocated an average of 39% of assets to alternatives, up from 35% last year. That figure rises to 49% among the top decile institutions and 46% in the top quartile. The growth rate among the top endowments in terms of dollars in the latest research, however, is about half as that recorded the year before, which surged about 8 percentage points vs. 3 percentage to 4 percentage points in this go around.
In other findings:
27% of those polled expect to increase alternatives allocations, though that percentage rises to 56% among institutions with assets of between $500 million and $1 billion, while at the same time 65% of that group say it will cut domestic equity allocations.
33% of public institutions responded that they will up their allocations to alternatives.
Endowments in the $500 million-$1 billion group say 79.1% of their growth came from returns, while that figure drops to 75% among those with more than $1 billion in assets.
Overall returns for alternative strategies was 14.6%, compared with average total returns 11.2% for private institutions, 10.1% for public institutions and 9.6% at independent schools. In comparison, domestic equity grew by 10.2%.
Among alternative investments, energy &natural resources performed best, soaring 39.9%, followed by distressed debt (26.2%), public equity real estate (19.1%), private equity (18.9%), private equity real estate (15.5%) and hedge funds (10.6%).
For the third year in a row, allocations to hedge funds in the alternatives portfolio have dropped, from 47% to 46%.
-Institutional Investor-
Posted by su at January 12, 2007 2:47 PM