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February 26, 2016

Tiny Colleges Catching Up to Elites on Endowment Returns

Universities with the smallest endowments are showing signs of outperforming their wealthier brethren in investment gains, a New York Times financial columnist writes. James Stewart notes the latest endowment report by the National Association of College and University Business Officers and the Commonfund Institute, which shows institutions with less than $25 million in assets averaging 10.6 percent returns over five years, compared to 10.4 percent for $1 billion-plus universities.

Mr. Stewart's Common Sense column focuses on Radford and Southern Virginia universities, located 90 miles apart in southwest Virginia, which he says rank one and two in 10-year annualized returns. Southern Virginia and many other small private colleges eschew alternative assets such as hedge funds and private equity, which loom large in the investment strategies of higher-education heavyweights such as Yale and Harvard.