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Education endowments strong

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Endowments at U.S. colleges and universities earned an average of 10.7 percent on their investments last year, more than enough to cover their spending, a new study says.

While almost eight in 10 endowment dollars were invested in equities and fixed income in 2006, the study by the National Association of College and University Business Officers says the trend toward alternative investments continued.

Over the past 10 years, the share of assets invested in options other than equities and fixed income has tripled.

Among alternative assets, private equity saw the largest allocation increase, more than 500 percent over the last decade, followed by 400 percent for natural resources.

With an average spending rate of 5 percent to cover operating expenses, inflation rate of 3 percent and fee rate of 1 percent, the group as a whole exceeded the general 9 percent goal for returns, the study says.

The study analyzed returns for 765 groups, the majority of which have less than $100 million in assets.

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