What do university endowment managers worry about? An analysis of alternative asset investments and background income

Harvey S. Rosen, Alexander J.W. Sappington

Research output: Contribution to journalArticle

2 Scopus citations

Abstract

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.

Original languageEnglish (US)
Pages (from-to)404-425
Number of pages22
JournalEducation Finance and Policy
Volume11
Issue number4
DOIs
StatePublished - Oct 1 2016

All Science Journal Classification (ASJC) codes

  • Education

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