According to Business Insider, here are the ten worst performing higher education endowments.
1. Harvard, down 30% and $10.9 billion.
2. Yale, down 29% and $6.5 billion.
3. Duke, down 28% and $1.7 billion.
4. Brown, down 27% and $730 million.
5. Syracuse, down 33% and $327 million.
6. University of Minnesota, down 27% and $312 million.
7. Cornell, down 26% and $1.4 billion.
8. University of Southern California, down 26% and $918 million.
9. California Institute of Technology, down 26% and $483 million.
10. Grinnell, down 27% and $396 million.
Wow. The total loss for the above endowments is about $23.67 billion. (this is just sample of a population of over 800 endowments) That is some serious cheddar. Some of the most "elite" schools in the country are represented on this list. One would think with portfolios the size of a small country's GDPs that risk management and hedging would be a core strategic component of endowment management. Guess not. What will be interesting is measuring the long term costs of these staggering losses to the reputations, quality, moral, and perceptions of the aforementioned schools and other top losers. Endowments were a huge value add to differentiating these institutions in the marketplace. They underwrote specialized faculty members who added prestige, exotic resources, important research, unique facilities, and scholarships among other things. When these dry up, what happens?
From a consumer perspective, tuitions will definitely increase at all of these schools due to acute operating budget shortfalls. (They'll increase everywhere) Due to systemic failures, there are few, if any, white knight philanthropists able to bridge the budget gaps of this magnitude. Value will get harder to define. Much like the collapse of the storied and allegedly invincible investment banking houses last year, is higher education slowly entering a new era in terms of how universities are perceived and managed? Will the titans fall? Given that the squeeze is near universal, it's hard to gauge who will win and who will lose. The werewolf still hasn't gotten his paws around the implications of these imploding endowments. Considering they took generations to build, most of them will likely never regain what they've lost from a balance sheet perspective. Once the balance sheet goes south, it's open season. It should be interesting to watch how this all plays out.
Here is the methodolgy:
24/7 Wall St. has analyzed the data for all 842 institutions and made comparisons based on 1) absolute dollar gain and loss, 2) percentage gain and loss, 3) greatest percent and absolute dollar gains and losses at the largest endowments (those with over $1 billion under management) with a special focus on those that lost 5% more than the average endowment in the survey or 23.7%, and 4) colleges and universities with endowments of more than $300 million which outperformed the average endowment loss of 18.7% by 5%–that is, those which had percentage losses of 13.7% or less.
Based on this analysis, 24/7 Wall St. picked the 20 worst managed university and college endowments and the 17 best. There were not enough colleges and universities to make a list of the 20 best based on our criteria. 24/7 also picked a “best of class” of endowments of more than $100 million which had absolute percentage gains over the one year period. Only 33 endowments of any size in this group of 842 had positive gains.
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