Hedge Funds Continue to Gain in Endowments' Altern

WILTON, Conn. (HedgeWorld.com)–Hedge funds now account for 42% of alternative assets in school endowments, a Commonfund survey shows. By contrast, the share of private equity and venture capital has shrunk to 25%.

Across endowments of various sizes, hedge funds take up 41% to 56% of alternatives allocations. The proportion is less for larger endowments, which have higher percentages of assets in private equity, venture capital, equity real estate and natural resources.

But alternatives as a whole are a much more important part of large asset pools. For example, endowments of more than $1 billion had 43% in alternatives, while those in the US$51 million to US$100 million group had only 10%. For all endowments, alternatives comprise 32% of total assets and the allocation target is 35%.

The 637 study participants collectively have US$184 billion in assets and include top universities such as Harvard, Stanford and Yale. Twenty-four have assets of more than US$1 billion. But most are much smaller, such as the 193 institutions that fall in the $10 million to US$50 million category.