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SIGNIFICANT ENDOWMENT PRESENCE CONTINUES

In the United States, endowments have been the most active institutional group allocating to hedge funds. This is largely due to investment committee members who are already familiar with the concept as high-net-worth investors. Endowments and foundations have a history of moving into new types of investments quicker than pension funds.

NACUBO, the National Association of College and University Business Officers, started to include hedge funds in its endowment survey in 1994. At that time, the average endowment allocation to hedge funds was 0.4 percent. By 1999, 104 U.S. colleges and endowments out of the 508 participating allocated to hedge funds. (See Table 19.1.) The average allocation had grown to 2.3 percent, which equated to $3.9 billion. Public universities allocated an average 2.1 percent, while private schools allocated about 6 percent of their portfolios average.1

A large variation exists in the percent allocation by the individual colleges. For example, Yeshiva University in New York City allocates 42 percent of its endowment to hedge funds. Others allocating over 20 percent include Bowdoin College (27 percent), Denison University (27 percent), Reed College (26 percent), Clark University (25 percent), Alfred University (25 percent), King's College (24 percent), Wheaton College (24 percent), and Oberlin College (20 percent), Some other colleges make no allocation whatsoever to hedge funds.2