WEST PALM BEACH, FL (HEDGECO.NET) – The endowment fund of Vanderbilt has experienced declines for the past several years, part of the problem was in the fund�s investment philosophy, but somethingchanged, as the investment managers of the fund decided to change its investment tactics in 2003.They shifted assets from Treasury Bonds to hedge funds and real estate, and realized profits as theportfolio gained 19.3% in 2003.
William Spitz, vice chancellor of investments and treasurer for the Vanderbilt Endowment fund explained, that �While long-term U.S. Treasury Bonds were the best performing asset category in Fiscal Year 2003, which ended on June 30 and yielded a 19.4 percent return, the endowment saw slightly negative bond returns in the latter half of 2003�.
Spitz explained that his investment management team reduced the endowment allocation to stocks and bonds in 2003, and increased the hedge fund and real estate allocations. He predicted that as many assets have been shifted away from stock and bond markets, 2005 and 2006 possibly may not be particularly good, stock market and bond market returns may be modest according to Spitz. He further said that Vanderbilt Endowment would continue to increase its hedge fund allocations for the immediate future. Spitz said �the endowment is split into at least a dozen hedge funds, of which several of those have multiple strategies.�
Pension funds and Endowments have continuously increased their hedge fund portfolios over the years. About four years ago an insignificant number of such institutional investors invested in hedge fund strategies. Pension funds and Endowments have always maintained a more conservative investment philosophy, most invested in stock and bond vehicles.
Since the collapse of the technology sector and the ensuing bear market, Pension plans and Endowment have discovered hedge funds, according to Spitz, at the end of 2003, 37 percent of the Vanderbilt�s endowment was invested in hedge funds and more money has been added since.
Still there are hedge fund market analysts who think that many Pension plans have not adopted hedge fund investment philosophy yet, however there is no doubt that many more Pension Plans and Endowments would increase their hedge fund investment portfolios in the years to come. These trends point to the fact that the global hedge fund industry would continue to grow exponentially for many more years to come.
Paul Oranika
Editor-in-Chief
HedgeCo.Net
Email: Editor@hedgeco.net
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