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Mix-Ansicht- Investieren Sie dort, wo die schlauen Leute investieren! - Ricoletto, 18.06.2003, 12:19
Investieren Sie dort, wo die schlauen Leute investieren!
-->... unter dieser Überschrift erhielt ich eine mail eines Vertriebes für die"seeligmachenden" (ob reich machend wird man sehen ;-)) Hätsch-Fonds
aber nun zum angehängten Bericht
Yale, Harvard, Unfazed by Risks, Rely on Hedge Funds (Update3)
June 10 (Bloomberg) -- David Swensen, who arrived at Yale University from Wall Street in 1985 to manage the school's $1 billion endowment, has rejected the way most colleges invest their money and put five times the average into hedge funds.
About 26 percent of the university's $10.7 billion endowment is in these loosely regulated portfolios that bet on rising as well as falling securities prices. U.S. colleges average a 5 percent allocation, according to the National Association of College and University Business Officers.
Hedge funds helped Yale's endowment gain about 17 percent a year during the past decade, placing it in the top 1 percent of competing institutional investors, data compiled by SEI Investments show. Had Yale's return matched that of the average college, its fund would be about $5 billion poorer, Swensen said.
``We haven't had a losing year since 1988,'' said the 49-year- old Swensen, who holds a doctorate in economics from Yale in New Haven, Connecticut, and previously worked for Lehman Brothers and Salomon Brothers, now part of Citigroup Inc.
Some analysts said universities such as Yale, Harvard and the University of North Carolina at Chapel Hill, with at least a quarter of their money in hedge funds, may be taking too much risk.
``An allocation to hedge funds is OK, but an excess allocation increases concerns'' about whether the manager can produce consistent returns, said Geoff Bobroff, a former Securities and Exchange Commission lawyer who now runs his own fund-industry consulting firm in East Greenwich, Rhode Island. ``We've seen some hedge fund managers fall apart.''
Long-Term Blowup
Yeshiva University in New York was an investor in Long-Term Capital Management, the fund that lost $4 billion, or more than 90 percent of its capital, in 1998 and was bailed out by Wall Street firms. Over the life of the Long-Term Capital Management fund, which began in 1993, Yeshiva and other original investors made about 19 percent because the fund had returned a significant portion of investors' cash at the end of 1997.
Yale, Brown University of Providence, Rhode Island, and several other schools were investors in Bermuda-based Everest Capital Ltd., an emerging markets fund that lost about $1 billion in 1998. Even with the loss, the Everest fund has risen 8.5 percent a year, on average, since 1995, compared with an annual loss of 5.2 percent for the Morgan Stanley's emerging market index.
Regulation
Hedge funds, which are designed for investors with at least $1 million, endeavor to make money whether financial markets fall or rise. They can use leverage to help boost returns and they can sell short, or borrow securities and immediately sell them with the hope of buying them back at a lower price.
The Securities and Exchange Commission is considering increasing regulation of the $600 billion industry after the number of fraud-related enforcement cases doubled to 12 last year.
As colleges and universities with $1 billion-plus endowments lost almost 4 percent on average from investments in the fiscal year ended June 30, Yale University rose 0.7 percent, University of North Carolina's $1 billion pool gained 1.2 percent, and Harvard University's $17 billion fund declined 0.5 percent, SEI reported.
Boston University's $585 million endowment, by comparison, lost 13 percent in the 12 months ended June 30, said Colin Riley, director of media relations for the school.
`Exiled Royalty'
The declines in most universities' portfolios led to belt- tightening. Dartmouth College in Hanover, New Hampshire, delayed construction projects on campus as its investments dropped 5.7 percent, said James Wright, the college's president, in a letter posted on the Dartmouth Web site.
Bryn Mawr College in Pennsylvania raised tuition fees by 5 percent. The total endowment, now $400 million, fell by 7.7 percent in the year ended June 30, mostly from an investment loss of 5.1 percent, said Jerry Berenson, the school's treasurer.
Stanford University in Menlo Park, California, lost 2.6 percent of its $7.6 billion endowment as stocks fell, said Elaine Ray, director of the university's news service. The drop in assets caused Stanford to initiate a hiring freeze for its staff, and a salary freeze for faculty and staff, she said.
The losses haven't diminished interest in hedge funds, said John Griswold, senior vice president of the Commonfund, which manages about $29 billion for 1,600 clients, mostly educational institutions. Because universities generally spend about 5 percent of their endowment each year, they have to produce at least that return, plus the inflation rate, to maintain the value of their funds, he said.
Risk Unavoidable
``To get 5 percent, you must take some risk, and that's why they are looking at equities and alternatives that promise higher returns,'' Griswold said.
Universities share ``one characteristic with compulsive gamblers and exiled royalty: there is never enough money to satisfy their desires,'' wrote Derek Bok, the former president of Harvard University in his book ``Universities in the Marketplace: The Commercialization of Higher Education.''
Yale's Swensen says hedge funds are generally safe, as long as a talented manager is running the portfolio.
``Hedge funds are all about active management and it is almost impossible without a huge amount of resources to identify the right managers,'' he said, declining to reveal the identities of the funds he invests in. Swensen works with a 17-member team to farm out the endowment's cash.
`Have a Place'
Hedge funds have shown ``they have a place in a portfolio,'' said Caroline McLaurin, head of the foundation and endowment practice at SEI in Oaks, Pennsylvania. ``They can stop the bleeding and volatility of returns, and boost performance.''
The University of North Carolina-Chapel Hill endowment started investing in hedge funds five years ago and has 55 percent of its assets with managers including Maverick Capital, AQR Capital Management LLC and Citadel Investment Group LLC, said Chief Investment Officer Mark Yusko. The University of Virginia, which started its program at the same time, has 60 percent, according to the school's Web site.
Yusko doesn't consider hedge funds to be a separate strategy. It's a different and better way to invest in stocks and bonds, he said. ``I like to say we have 55 percent of our assets in marketable alternatives,'' Yusko said.
Some endowment mangers say that having half of their cash in hedge funds is too much, especially in a bull market where shorting may reduce performance.
Half in Hedge Funds
``I would be opposed to 50 or 60 percent in hedge funds because it takes you out of too many other asset classes,'' said Louis Morrell, treasurer of Wake Forest University's endowment in Winston-Salem, North Carolina, which has about 17 percent of its $800 million in hedge funds.
The fund, which was worth $420 million in 1995 when Morrell joined, lost 9 percent in 2001 and 5 percent last year.
``We think inflation is coming, so we want to go into inflation-protection bonds, commodities and real estate,'' Morrell added. ``But if the market went bad, we would think about increasing our exposure to hedge funds.''
Jack Meyer, chief investment officer for Harvard's endowment since 1990, goes one step further, according to a case study on Harvard Management Co. produced by the university's business school in October 2001.
Harvard
Harvard, which declined to provide details about its investments, manages about 65 percent of its assets in-house. Each Harvard team of managers, whether it trades stocks or bonds, finds related assets that are mispriced relative to each other, then buys the cheap ones and sells the expensive ones.
A manager might, for example, buy the non-voting shares of a European company and sell the voting shares short -- that is, borrow the stock and immediately sell it in the hopes it can be bought back more cheaply later on. They also might buy a convertible security and short the common stock, or buy a commodity on the spot market and short futures.
Harvard of Cambridge, Massachusetts, averaged annual returns of 15.2 percent in the 10 years ended June 30. That compares with 12.8 percent for larger endowments, according to the National Association of College and University Business Officers.
Denison University of Granville, Ohio, whose endowment has climbed 14.4 percent a year in the past decade, has 16 hedge fund managers who account for 41 percent of the endowment, said Michael Horst, director of finance for the $415 million portfolio. He declined to identify the managers.
``Denison isn't chasing a hot asset class,'' Horst said. The university has invested in hedge funds since 1988, including managers who trade stocks, fixed-income and distressed debt.
``As Denison was successful in selecting managers with the ability to deliver equity-like returns with lower volatility, we became more comfortable with a higher allocation,'' said Horst, adding that his hedge funds produced positive returns during the past three years, although his traditional equity managers didn't.
The endowment lost 10.4 percent in the fiscal year ended June 30, 2001, mainly because of an investment with Oak Associates Ltd., a fund manager that invested heavily in technology shares.
Last Updated: June 10, 2003 17:43 EDT
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