How Hedge Funds Loot College Endowments

This first appeared on

Hedge funds are back in the news for for paying more than $1 billion each to the top 10 hedge fund executives in 2015 despite mixed performance.

This reminds me that I’m overdue to review a great new report from Hedge Clippers about how hedge funds loot college endowments for private profit. Hedge Clippers is a coalition that includes the New York affiliates of the AFL-CIO, American Federation of Teachers, Citizen Action, SEIU, and others.

The report finds that hedge funds charged more than $2.5 billion in fees in 2015 for managing about $100 billion of the $500 billion in total U.S. college endowment assets. The report further details how hedge fund performance in managing endowment investments fared no better than major indices for overall market performance.

I particularly like that report details how the highest allocations of endowment assets to hedge fund investments is at public and less elite non-profit schools. This suggests that schools with larger and more diverse enrollments may particularly lose scarce resources to hedge funds. Barnard, Trinity, and Smith colleges all allocated more than 60 percent of endowment assets to hedge fund investments. The University of Maryland system allocated more than 50 percent of assets to hedge fund investments. Michigan State, Oklahoma State, SUNY Stoneybrook, University of Illinois, and UCLA all allocated more than 40 percent of assets to hedge fund investments.

Read the full piece here.

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