US varsities feel the pinch of economic slump

Updated on: Wednesday, September 23, 2009

New York: Most of the top US universities that jumped into financial markets during the boom years are now paying the price for taking on too much risk with their endowments ahead of the global financial crisis.

Some of the most prestigious US learning institutions have been hit hard after having shifted in recent years from a conservative strategy into riskier bets such as commodities, real estate and private equity ventures outside traditional markets.

Harvard University has acknowledged its endowment tumbled 27 per cent in the 2008-2009 fiscal year to $26 billion. Ivy League rival Yale University lost 30 per cent over the same period, leaving its balance at $16 billion.

Some say that a growing number of universities, which either manage their own investments or hire outside firms, became too greedy during the heady days of the boom.

According to research firm Wilshire Associates, the median loss for foundations and endowments in the 12 months to June 30 was 19.1 per cent despite a first-quarter round of 10.6 per cent.

Yale president Mr Richard Levin, said only a small fraction of the school endowment is invested in publicly traded securities, so the recent market rebound has not helped Yale.

US varsities feel the pinch of economic slump

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