For a while, since the investment returns of Harvard and Yale universities were so outsized, everyone seemed enamored of the so-called “endowment” model of investing.
While specifics varied, many of these huge funds turned to hedge funds and used alternative strategies such as shorting, as well as alternative investments such as real estate and private equity because their long-term, illiquid nature fit university endowments’ own long-term time horizon.
A Favorite of Endowments
One of the noteworthy long-term investments in many endowment portfolios is timber. Like wealthy investors in the past, the endowments actually own thousands of acres of timberland worth tens of millions of dollars. Talk about an illiquid investment!