Bloomberg News

UCLA Gifts Make Endowment Biggest Gainer as Harvard Lags Behind

March 15, 2012

The University of California, Los Angeles endowment has grown the fastest among U.S. colleges since 2008 as markets recovered and gifts from philanthropists such as casino mogul Kirk Kerkorian surged.

UCLA’s endowment size increased an average 12.3 percent annually to $1.49 billion in the three years through 2011, almost double the 6.5 percent growth of Washington and Lee University in Lexington, Virginia, the next best-performer, according to data compiled by Bloomberg. By contrast, the endowment at Harvard University, the world’s richest college, shrank 3.7 percent to $31.7 billion.

Private donations to UCLA have rebounded since the financial crisis amid deep cuts by the state to public university funding. Gifts and pledges surged last year as Kerkorian, 94, transferred a $200 million foundation he controlled to UCLA while Meyer and Renee Luskin donated $100 million. At the same time the school has earned 17 percent and 12 percent in investment returns in the past two years to recoup a 21 percent loss in 2009, according to the university.

“Because of the strength of the development program we didn’t have a shortage of cash” after markets collapsed in 2008, said Steve Gamer, associate vice chancellor for development at UCLA who is also the executive director of the foundation investing the endowment. “That puts you in a strong position where you don’t have to sell” securities in the portfolio and lock in losses.

Still Recovering

Most college endowments are still struggling to recover from losses triggered by the collapse of Lehman Brothers Holdings Inc. in 2008, according to an annual report by Commonfund and the National Association of College and University Business Officers. About 47 percent of the funds haven’t yet recouped losses from that year, as investments in hedge funds lag traditional strategies such as stocks, the groups said in the January report.

Hedge funds returned 9.4 percent in the year ended June 30, the worst-performing portion among endowments’ alternatives strategies, as U.S. stocks surged 30 percent in that period, according to the report.

Yale University in New Haven, Connecticut, which under Chief Investment Officer David Swensen pioneered new investment strategies for endowments, was one of the worst performers, with its assets dropping an average 4.7 percent a year in the period to $19.4 billion, according to the Bloomberg study, which looked at 71 college funds with more than $1 billion of assets under management.

To contact the reporter on this story: Michael McDonald in Boston at mmcdonald10@bloomberg.net

To contact the editor responsible for this story: Lisa Wolfson at lwolfson@bloomberg.net


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