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College endowments recovered in fiscal 2010

By Daniel de Vise

College endowments earned 12.6 percent on average in the fiscal year that ended in June, a good year by any measure and a vast improvement over fiscal 2009.

Endowments lost more value in fiscal 2009 than in any prior year since the Great Depression, according to the last annual survey by the National Association of College and University Business Officers and Commonfund.

The 2010 NACUBO-Commonfund Study won't be complete till January. Preliminary data, gathered from 80 colleges, suggest that the industry recovered much of the value it lost in the market freefall of fall 2008.

It was the first positive return in three years, and it was not quite enough to erase the losses. Endowments have lost 3 percent on average over the past three years.

Take a look at Harvard, the university with the largest endowment. The fund earned 11 percent on the year. But that was only enough to raise its value to $27.6 billion, a sum that's 25 percent below its peak of $36.9 billion in fiscal 2008.

Smaller institutions have outperformed larger ones since the downturn, because smaller endowments tend to rely on more "traditional" investments that lost less money, according to the survey directors.

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By Daniel de Vise  | November 3, 2010; 3:35 PM ET
Categories:  Finance, Research  | Tags:  College endowments, university endowments  
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