Latest university endowment data shows that Harvard lost 29.8% on its investments in the fiscal year end June 2009. Yale lost 28.8%.
While Universities' foray as quasi-hedge funds hurt them badly, they actually outperformed the S&P 500 by a wide margin. Over ten years their endowments still managed to eke out a 4% gain, while the S&P 500 lost 20%.
Steep recent losses have nonetheless forced many universities to leverage up with debt in order meet their spending needs, which seems a disturbing new trend in and of itself:
WSJ: More than half of the schools said they increased their endowment spending and 35% of institutions increased the amount of their long-term debt, many to cover the increased needs of student financial aid and meet basic operating expenses.
Total long-term debt at these institutions rose to $167.8 million from $109.1 million the previous year. Average debt levels were driven upward by institutions with assets over $1 billion and by public institutions, the study said.
"Public institutions don't have much choice," Griswold said. "Subsidies from state legislatures have been slashed and donations are down, it's a double-whammy."
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