“One of the things we need to do is get our compensation better aligned,” said Harris, referring to pay for outside fund managers that invest the endowment’s money. “We will be making an assessment of the firms we want to go forward with.”
Endowments and foundations have been seeking to cut management costs and concentrate bets with their best performing funds as returns have become more volatile and muted in the years since the 2008 financial crisis. While most schools are reporting double-digit investment gains for the year ended June 30, the average 10-year performance in higher education is stuck at about 5 percent, dangerously close to what is spent annually from the funds to support academics.
UTIMCO produced a 13.4 percent return in the most recent fiscal year, a top-quartile performance compared with peers, it said in a report last week. Still, it has been a laggard over the past decade, with an average annualized gain of less than 5 percent, saying it missed opportunities because it traditionally has had a more conservative portfolio.
The investing arm of the university systems manages an additional $12 billion of operating funds, bringing total assets under management to more than $40 billion.
Michael McDonald, Bloomberg