Managing university endowments has emerged as fertile growth territory for banks and investment firms seeking new business in a struggling industry, writes Bloomberg.
Outside contractors now oversee $100 billion for institutions of higher education, more than double the total in 2010, according to data from surveys by the National Association of College and University Business Officers and Commonfund. While it represents a tiny slice of the $53 trillion in U.S. assets under management, the endowment market is a rare area of growth for firms facing stiff competition from index- and computer-driven strategies that offer lower client fees.
Endowment business also offers financial houses access to wealthy donors and trustees, while universities get help managing increasingly complex portfolios. The number of investment firms targeting colleges, foundations, and family offices has grown from just a few a decade ago to nearly 80 now, according to Charles Skorina, an executive recruiter who writes a newsletter about the endowment business.