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NYU takes stock – Donors call for bolder investments

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The trustees of New York University are moving more of the school’s $1 billion endowment out of bonds and into the stock market after more than two decades of cautious investments, Bloomberg reports.

For almost 20 years, trustees – including Loews Corp. co-chair Laurence Tisch and former hedge fund manager Michael Steinhardt — have invested more than 80 percent of the endowment in bonds.

Today the university’s endowment is about half what it would have been if it had been invested in more stocks – a strategy that was determined too risky for the school’s relatively small endowment.

A larger endowment would enable NYU to expand services without raising tuition. An extra $1 billion in the endowment would add $50 million to the school’s yearly budget – equivalent to tuition for about 2,000 undergraduates.

Partly in response to donor pressure, NYU’s trustees are finally moving into the stock market – exercising caution with an endowment which is less than one-third the average for U.S. private universities, Bloomberg says.

“It’s not our money. If you screw it up and there’s a downturn, the university could suffer dramatically because you don’t have the cushion,” said current NYU chair and mergers lawyer Martin Lipton.

The university does not regret its conservative financial strategies, NYU spokesman John Beckman says, and its $32,000 rate for annual tuition and fees is on a par with similar schools.

“When most schools do fundraising, it’s to grow the endowment,” he said. “We used it to grow the university. We’re comfortable with the choices we made.”

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