Are the Big College Endowments Really Big Losers?

By on September 12, 2009

John Hechinger has written an article for the Wall Street Journal entitled, “Harvard, Yale Are Big Losers in ‘The Game’ of Investing.” By utilizing exotic thinly traded investments these ivy league schools suffered 30% losses in the year ending June 30, 2009.

However, their long term results are still the envy of many other institutions. Harvard averaged about 9% a year for the 10 year period, during which time the S&P 500 has been negative.

SMA Comment: One year of above average losses in the worst downturn since The Great Depression hardly relegates Harvard and Yale to the status of big losers. The losers were those who attempted to copy the high-status university’s success by investing in non-traditional investment vehicles which had become extremely overvalued; partly due to the publicity Harvard and Yale generated with their investment strategy.


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