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Oxbridge combined assets pale against US counterparts

Finance | Gareth Jones | 1 Apr 2008

Oxbridge colleges are still lagging behind their US counterparts, according to a recent study by London Business School. Research looking at 61 endowed Oxbridge colleges reveals they hold considerably fewer endowment assets than their US counterparts, such as Yale and Harvard. Three Oxbridge endowments are worth more than $1 billion, however, in the US, 56 such funds exceed $1 billion.

The Oxbridge colleges follow many and varied investment strategies according to the research undertaken by the London Business School and led by Shanta Acharya and Elroy Dimson. It reveals a number of common characteristic to the different strategies undertaken by colleges which have varying asset allocations with differing risk profiles, including a long-term emphasis on real assets, low exposure to hedge funds and private equity, and a high number of managers employed with a low manager turnover.

Half of all colleges have all assets managed externally. Two-thirds have at least 90 per cent managed externally and 5 per cent are managed entirely in-house. Half of Oxbridge endowments do not have any investment in alternative strategies and a third considered alternative strategies too risky. Some 20 per cent expressed a desire to increase their allocation, however. Among the 15 institutes with assets over £100 million, the average exposure is still under 10 per cent.

The full research has been published in Endowment Asset Management. The book looks to the future and suggests that the management of university endowments at Oxford and Cambridge is set to change with the appointment of new chief investment officers. It predicts a rise in the number of investment bursars with professional investment background and expertise, changes in approach to investing (total return) and rise in allocations to alternative strategies. It also foresees a move to a greater use of consultants.  

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