Endowment Duel: Houghton vs. Harvard

The New York Times: The hotly competitive returns of college endowment performance are out, and the results have again shaken the higher education elite down to their Ivy League roots: The smallest endowments — those with total assets under $25 million — outperformed their billion-dollar-plus rivals for the second year … Falling behind by nearly a full percentage point has a huge impact on giant endowments like Harvard’s, which stood at $35.7 billion at the end of the fiscal year … Yale’s total endowment dropped by $200 million, to $25.4 billion.”

“Compare the results with those of Houghton College, a liberal arts institution affiliated with the Wesleyan Church in the Genesee Valley in western New York. Houghton has just over a thousand students and an endowment of $46.4 million. Houghton emerged in the top quartile of all endowments, according to Nacubo, with a return of 11.85 percent for the year ended Sept. 30.”

“How did tiny Houghton do it? The answer is pretty simple: Houghton got out of hedge funds and all alternative investments a year and a half ago, and moved the entire portfolio to a mix of low-cost index funds and mutual funds at the fund giant Vanguard.”