College endowments slated for worst returns since recession
- After the market saw double-digit gains for college endowments in 2014, the funds for institutional returns will drop by .74% this year, the second consecutive year of losses for institutions of all sizes.
- Institutions with at least $500 million in funds, which have followed the Yale University model of investing in private businesses and illiquid assets, are likely to take the steepest losses.
- Public pensions have experienced similar losses, which indirectly impacts colleges through taking more taxpayer money to cover investment losses and reduces appropriations from state-supported institutions.
Colleges which have built the nation's elite endowments through real estate, private equity and international investments are now taking the biggest losses in their investment strategy. This presents another challenge in the effort to build institutional wealth, in addition to federal inquiry over how returns are spent.
College business officers will be harder pressed to determine how to avoid the impact of slipping faith in international markets and corporations, with more intense research in domestic companies and, perhaps, more focus in the business-building strategy implemented by Arizona State University.