Education endowments put more with hedge funds

Date: Tuesday, January 27, 2009
Author: Reuters.com

Universities and schools put more money into alternative investments like hedge funds in fiscal 2008, researchers reported on Tuesday.

The Commonfund Institute, a group that polled 628 educational endowments on their investment tastes, found their appetite for alternatives increased slightly in fiscal 2008 after having fallen off modestly in fiscal 2007. The fiscal year runs through the end of June 2008.

"With public equity markets declining sharply," the researchers said, "the long-term trend for alternative asset strategies to capture a greater share of educational institutions' investment portfolios continued in fiscal year 2008."

In 2008, endowments invested roughly 46 percent of their money in alternatives, up from 42 percent in 2007 and 27 percent in 2000. Large endowments, with over $1 billion in assets, have as much as 52 percent invested, up from 47 percent invested in 2007.

Endowments had been instrumental in helping hedge fund industry assets double to about $2 trillion at the end of fiscal 2008.

But by the end of the 2008 calendar year, the average hedge fund had lost roughly 19 percent and investors pulled out $155 billion, leaving the industry with about $1.4 trillion. (Reporting by Svea Herbst-Bayliss; Editing by Gary Hill)