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Taking risks – Triple-digit returns

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Endowment managers have emerged as campus celebrities, with investments in speculative venture capital, or private equity, yielding big returns, The New York Times reported Nov. 19.

Gains include 59 percent by Duke University on its $1.7 billion endowment in the year ended June 30, 59 percent by the University of Notre Dame, more than 50 percent for the Massachusetts Institute of Technology and more than 40 percent for at least six other schools.

At Harvard, a 32 percent profit generated $4.6 billion – more than the total endowment of all but seven other U.S. colleges.

But tempering some investments is the possibility that bets on early-stage companies could be wiped out before a product or service even gets to market.

Even some of the biggest fans of venture investing worry that the big payoffs probably won’t continue.

“A lot of the money going into private equity now, I think, is going to generate very disappointing returns,” David F. Swensen, chief investment officer at Yale and a pioneer in aggressive endowment investing, told the Times.

For full story, go to The New York Times.

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