Yale endowment ekes out 4.7 percent gain in fiscal '12
NEW YORK, Sept 27
NEW YORK, Sept 27 (Reuters) - Yale University said on Thursday that its endowment gained 4.7 percent in fiscal 2012 down from the previous year's 21.9 percent gain, in another sign of the investment challenges facing the nation's top colleges and universities.
Yale also said its endowment slipped in value to $19.3 billion at the end of June from $19.4 billion the previous year.
Fellow Ivy League schools Harvard University and University of Pennsylvania also reported dramatically weaker results for fiscal 2012 recently.
Harvard University said its $30.7 billion endowment slipped 0.05 percent in fiscal 2012, far lower than its 21.4 percent gain in fiscal 2011 after its emerging market stock investments saw hefty losses.
The University of Pennsylvania endowment reported a 1.6 percent gain last week, also far weaker than its 18.6 percent return a year earlier.
Yale expects to rebalance its assets in fiscal 2013, raising its allotment in private equity to 35 percent; in real estate to 22 percent; and in absolute returns, which include hedge funds, 18 percent.
Last year, it aimed to invest 34 percent in equities; 20 percent in real estate and 17 percent in absolute return.
Yale's Chief Investment Officer David Swensen was not immediately available for comment.
"All large institutional investors increasingly have been investing more assets in alternative investments because returns in equities and fixed income have been so weak for so long," said Amy Borrus, deputy director of the Council of Institutional Investors, whose members have more than $3 trillion under management.
Public pension fund managers have also poured billions of dollars into alternative investments, ranging from Polish energy facilities to catastrophe bonds, as lackluster stock market returns and historically low interest rates have made it difficult for pensions to earn high returns.
Yale earned a 10.6 percent annual return over the last decade, benefitting from foreign stock investments that earned 16.6 percent; followed by an annual return of 16.2 percent from natural resources investments; and a 13.2 percent gain from private equity.
In a survey of 151 U.S. institutional investors ranging from public pensions to endowments released Tuesday from Natixis Global Asset Management, 73 percent of managers said that alternative investments were critical to outperforming the broader market.
Yale said that it aims to allocate just 6 percent of its assets to U.S. stocks and 4 percent to bonds and cash.
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