Investing: Big Risk on Campus

When the multibillion dollar endowments at Harvard and Yale reported stellar returns during the bear market, endowment managers at other colleges took notice. Harvard and Yale didn't get there by investing in boring stock index funds. Instead they did it by putting sizable chunks of their portfolios into hedge funds, the pricey, lightly regulated, and highly secretive investment pools that cater to big institutions and wealthy individual investors. As of June 30, 2005, the most recent date for which data are available, Harvard and Yale had 12% and 25% of their respective endowments earmarked for these alternative investments.

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