A Hard Landing for University Endowments
13th October 2012
It turns out, surprise, surprise, that high returns were actually linked to high levels of risk (not to mention liquidity risk). And that the management fees at hedge funds and the like are much higher than for low-cost index funds and the like. And the hedge fund managers collect 20% of the up-side return and a percentage of the assets under management (they don’t reimburse for downside returns though, of course).
Sort of makes you wonder why, if these funds are so risky and expensive while returning below-market returns, universities persist in investing so much money in them.
Sort of makes you wonder why people are willing to entrust such people with the education of their children.