Shanta Acharya and Elroy Dimson
- Published in print:
- 2007
- Published Online:
- May 2007
- ISBN:
- 9780199210916
- eISBN:
- 9780191705816
- Item type:
- book
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/acprof:oso/9780199210916.001.0001
- Subject:
- Economics and Finance, Financial Economics
There is a profound linkage between the quality of a university and its financial resources. The universities of Oxford and Cambridge rank among the world's finest educational institutions, and are ...
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There is a profound linkage between the quality of a university and its financial resources. The universities of Oxford and Cambridge rank among the world's finest educational institutions, and are able to draw on invested assets that are large by any standards. This book explores how the colleges that comprise these two universities make their investment decisions. Oxford and Cambridge are collegiate institutions, each consisting of a federal university and over thirty constituent colleges. While the colleges may have ostensibly similar missions, they are governed independently. Since they interpret their investment objectives differently, this gives rise to some remarkably dissimilar approaches to investment, which the book explores. It analyses the objectives, investment philosophy, asset management, and governance of over sixty college and university endowment funds. Drawing on research and discussions with Oxford and Cambridge investment bursars, the book investigate issues such as asset allocation and spending policy, which have a major influence on the institutions' financial health. This study reveals the colleges' individualism and diversity, and carefully analyses their strategies, which range from the traditional to cutting edge.Less
There is a profound linkage between the quality of a university and its financial resources. The universities of Oxford and Cambridge rank among the world's finest educational institutions, and are able to draw on invested assets that are large by any standards. This book explores how the colleges that comprise these two universities make their investment decisions. Oxford and Cambridge are collegiate institutions, each consisting of a federal university and over thirty constituent colleges. While the colleges may have ostensibly similar missions, they are governed independently. Since they interpret their investment objectives differently, this gives rise to some remarkably dissimilar approaches to investment, which the book explores. It analyses the objectives, investment philosophy, asset management, and governance of over sixty college and university endowment funds. Drawing on research and discussions with Oxford and Cambridge investment bursars, the book investigate issues such as asset allocation and spending policy, which have a major influence on the institutions' financial health. This study reveals the colleges' individualism and diversity, and carefully analyses their strategies, which range from the traditional to cutting edge.
Keith C. Brown and Cristian Ioan Tiu
- Published in print:
- 2015
- Published Online:
- September 2015
- ISBN:
- 9780226201832
- eISBN:
- 9780226201979
- Item type:
- chapter
- Publisher:
- University of Chicago Press
- DOI:
- 10.7208/chicago/9780226201979.003.0002
- Subject:
- Economics and Finance, Microeconomics
We provide a comprehensive analysis of university spending policies as well as how frequently and why those mandates are revised over time. Given the long-term and relatively static nature of the ...
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We provide a comprehensive analysis of university spending policies as well as how frequently and why those mandates are revised over time. Given the long-term and relatively static nature of the investment problem faced by the typical educational institution, existing theoretical models of endowment management predict that the permanent portion of the stated spending policy should be highly stable. However, we find that half of the endowments revised their rules at least once and about a quarter of the sample changed their spending policies each year. We show that larger endowments with lower historical portfolio returns and lower past payout levels are more likely to alter their future spending formulas, but that institutions having the ability to invoke special appropriations on a temporary basis are less likely to make adjustments to their permanent rules. Further, we document that both spending rule changes and asset allocation adjustments persist over time and that the former tends to lead the latter. While there is some evidence that endowment funds as a group produce superior returns relative to their policy benchmarks, we show that there is no difference in benchmark-adjusted performance between institutions that either did or did not change their spending rules.Less
We provide a comprehensive analysis of university spending policies as well as how frequently and why those mandates are revised over time. Given the long-term and relatively static nature of the investment problem faced by the typical educational institution, existing theoretical models of endowment management predict that the permanent portion of the stated spending policy should be highly stable. However, we find that half of the endowments revised their rules at least once and about a quarter of the sample changed their spending policies each year. We show that larger endowments with lower historical portfolio returns and lower past payout levels are more likely to alter their future spending formulas, but that institutions having the ability to invoke special appropriations on a temporary basis are less likely to make adjustments to their permanent rules. Further, we document that both spending rule changes and asset allocation adjustments persist over time and that the former tends to lead the latter. While there is some evidence that endowment funds as a group produce superior returns relative to their policy benchmarks, we show that there is no difference in benchmark-adjusted performance between institutions that either did or did not change their spending rules.
