Quote:
Originally Posted by Zimmer4141
CDL, I guess what I meant by cash was liquid assets. The endowment of a university (afaik) is held in liquid or semi-liquid assets rather than long-term assets like land and buildings.
The two endowments I have second hand knowledge of act primarily as a fund of funds (Duke and UPENN). This means they invest primarily in hedge funds (2-3 year lockups mostly and likely quarterly redemptions with 30-90 days notice after that with penalties for early redemptions) and private equity funds (typically 7-10 year commitments with no early redemptions). They also do some co-investments where they invest as a partner alongside a private equity or real estate fund (very illiquid as selling typically relinquishes the control premium and would often not even be allowed in the original contract). From what I know only the money on the margin is invested directly in the market and thus liquidity is low.
In theory, endowments have the longest timeframes of all investment vehicles and also the lowest need for liquidity and seek to achieve higher returns by sacrificing short term liquidity. Thus, it is highly unlikely than any endowment of meaningful size is very liquid. This is why so many of them, not just for universities, but also for charities, museums, private schools, etc. suffered so much in the recession. There was no ability to get out of the market and the liquidity premium also steepend which hurt their mark to market.