TY - JOUR
T1 - What do university endowment managers worry about? An analysis of alternative asset investments and background income
AU - Rosen, Harvey S.
AU - Sappington, Alexander J.W.
N1 - Publisher Copyright:
© 2016 Association for Education Finance and Policy.
PY - 2016/10/1
Y1 - 2016/10/1
N2 - This paper examines whether university endowment managers think only in terms of the assets they manage or also take into account background income, that is, the other flows of income to the university. Specifically, we test whether the level and variability of a university’s background income (e.g., from tuition and government grants) affect its endowment’s allocations to so-called alternative assets, such as hedge funds, private equity, and venture capital. We find that both the probability of investing in alternative assets and the proportion of the portfolio invested in such assets increase with expected background income and decrease with its variability.
AB - This paper examines whether university endowment managers think only in terms of the assets they manage or also take into account background income, that is, the other flows of income to the university. Specifically, we test whether the level and variability of a university’s background income (e.g., from tuition and government grants) affect its endowment’s allocations to so-called alternative assets, such as hedge funds, private equity, and venture capital. We find that both the probability of investing in alternative assets and the proportion of the portfolio invested in such assets increase with expected background income and decrease with its variability.
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U2 - 10.1162/EDFP_a_00193
DO - 10.1162/EDFP_a_00193
M3 - Article
AN - SCOPUS:84988599200
SN - 1557-3060
VL - 11
SP - 404
EP - 425
JO - Education Finance and Policy
JF - Education Finance and Policy
IS - 4
ER -