Texas, Virginia Universities Post Double-Digit Endowment Gains

(Bloomberg) -- Flagship public universities in Texas, Virginia and Kansas reported double-digit gains, driving U.S. endowments to reach record values.

It’s shaping up to be a second year of strong performance for many endowments, with a number of funds attributing the boost to alternative investments such as private equity and venture capital. Most college funds end their fiscal year on June 30 and report results in the fall as they receive performance updates on private investments.

The University of Virginia gained 11.4 percent as the state school’s endowment reached a record $9.5 billion. The performance, which is gross of fees, was driven by private equity returns of more than 22 percent, according to a report from the school’s investment office.

Top Allocations

The University of Kansas reported a 10.5 percent gain, as the value of its endowment rose to a record $1.5 billion. The top asset allocations were to public equities, hedge funds and real assets, which make up real estate and energy including alternatives such as wind and solar.

“Returns were broad-based but domestic equities, particularly private equity and venture capital, provided a boost,” James Clarke, senior vice president and treasurer of the fund, said in an email. The endowment also was helped by its natural resources portfolio and hedge fund investments, he said, and less allocation to traditional bonds.

The University of California, however, trailed peers with an 8.9 percent return as the state system’s endowment grew to $12.3 billion, according to a report for an upcoming board meeting. While the private equity portfolio produced a strong return at 22.7 percent, the hedge fund portfolio was weaker at 6.4 percent.

Last month, the University of Colorado attributed its 11 percent return to alternative investments.

Outpacing Peers

The University of Texas Investment Management Co., which manages money for the University of Texas and Texas A&M University, gained 11.3 percent as the assets it oversees reached $32.2 billion, according to a preliminary report to the organization’s board.

The returns compare with a median 7.4 percent, gross of fees, for endowments of all sizes in the period, according to data by Wilshire Trust Universe Comparison Service. Colleges usually report their numbers net of fees.

Among private school endowments, Massachusetts Institute of Technology gained 13.5 percent on its record $16.4 billion fund while Dartmouth College posted a 12.2 percent return as the fund’s value rose to a record $5.5 billion.

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