Author Topic: Yale paid 6% expense ratio last year  (Read 9978 times)

Jack

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Yale paid 6% expense ratio last year
« on: August 20, 2015, 06:12:44 AM »
That's not a typo: it's really 6%, not 0.06%. Six HUNDRED basis points!

The private equity fund managers handling Yale's endowment made $480M last year, which is much more than the amount spent from the endowment on tuition assistance, fellowships and prizes ($170M).

http://www.nytimes.com/2015/08/19/opinion/stop-universities-from-hoarding-money.html?_r=0

(Note: there appears to be a significant discrepancy in the article. The author claims Yale averaged a 36% annual return over 20 years, but the page linked to for the fund manager claims 13.8%.)

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Re: Yale paid 6% expense ratio last year
« Reply #1 on: August 20, 2015, 07:27:59 AM »
That seems very high for an endowment as large as Yale's - but how does it compare to managed accounts at other universities? Or just other large managed accounts?

0.06 sounds way too low to expect for an account to be managed.

Abe

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Re: Yale paid 6% expense ratio last year
« Reply #2 on: August 20, 2015, 08:01:13 AM »
Yale is a political machine that runs an investment fund to finance its influence generation. The university just happens to be the best way to legitimize it.

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Re: Yale paid 6% expense ratio last year
« Reply #3 on: August 20, 2015, 08:05:28 AM »
Active management fees are insanely high. And I also don't believe the 36% growth claim. CALPERS is one of the institutions that are dropping active managers entirely due to the high fees.

So is the fund manager's 13.8% before 2+20 fees? If so, a roughly 9.8% return is approximately the S&P500. If it's 6% fees throughout that period and they aren't part of the stated return, it lags the S&P500.

EricP

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Re: Yale paid 6% expense ratio last year
« Reply #4 on: August 20, 2015, 08:53:45 AM »
The only problem I have with this article is this

Quote
Similarly, we should require universities to spend at least 8 percent of their endowments each year.

I don't believe that universities should be spending down their endowments.  I think endowments are a good thing to help insulate education and research from industry support that could bias their research or at least cast a shadow on it.  IE: University A concludes that fracking has minimal risks to water pollution, but then it is discovered that Oil Company B donated a chunk of change 3 years back.

If you want to put 3 percent required spending per year of their endowments, I could live with that.  That way it is guaranteed to not disappear over the long haul, but they can't just straight up hoard money.

Abe

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Re: Yale paid 6% expense ratio last year
« Reply #5 on: August 20, 2015, 11:01:46 AM »
Private universities shouldn't be obligated to spend a fixed percentage per year of their endowments. These large endowments are used for financing new buildings, expensive research initiatives, etc.; these aren't recurring expenses that can be set at an annual rate.

EricP

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Re: Yale paid 6% expense ratio last year
« Reply #6 on: August 20, 2015, 11:10:50 AM »
Private universities shouldn't be obligated to spend a fixed percentage per year of their endowments. These large endowments are used for financing new buildings, expensive research initiatives, etc.; these aren't recurring expenses that can be set at an annual rate.

Then we can give them a little leeway in that they need to average X% over Y years, but if they're receiving tax perks and such for being universities, then I think it's perfectly reasonable that the government require they spend down their endowments even if they are private universities.

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Re: Yale paid 6% expense ratio last year
« Reply #7 on: August 20, 2015, 12:13:30 PM »
Yale is a political machine that runs an investment fund to finance its influence generation. The university just happens to be the best way to legitimize it.

Yeah, that's more accurate. Ivy League admissions are more about trying to predict who the elites of the next 50 years will be than about merit, which is why grades play a role, but are far from the deciding factor. Hence why the president's daughters always manage to get a seat at their Ivy of choice.* Because Chelsea Clinton was going to be an important person no matter where she went to school.

*I just realized the last 3 administrations have only had daughters. Huh.

Hmm, Hillary has a daughter. I believe that Trump only has daughters...haven't really cared enough to check for him or any other candidates. I wonder....

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Re: Yale paid 6% expense ratio last year
« Reply #8 on: August 20, 2015, 12:22:00 PM »

 Hence why the president's daughters always manage to get a seat at their Ivy of choice.

So do you think Jenna Bush turned down spots at them or didn't get in? Her Bachelor's is from a public university in Texas (UT-Austin, a very good one.) Unlike Barbara she wouldn't have been able to get in on grades (I went to high school with them; I know this for a fact), but obviously would have gotten in on "my father is the sitting president".
« Last Edit: August 20, 2015, 12:45:25 PM by iowajes »

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Re: Yale paid 6% expense ratio last year
« Reply #9 on: August 20, 2015, 12:55:19 PM »

 Hence why the president's daughters always manage to get a seat at their Ivy of choice.

So do you think Jenna Bush turned down spots at them or didn't get in? He Bachelor's is from a public university in Texas (UT-Austin, a very good one.) Unlike Barbara she wouldn't have been able to get in on grades (I went to high school with them; I know this for a fact), but obviously would have gotten in on "my father is the sitting president".

I think Jenna didn't want to go to an Ivy, so didn't apply. She strikes me as a Southern party girl type, and I don't think any of the Ivies would have been her thing. And if you're the Bush family and you use Texas as a power base, there are worse things to do than sending the less academically inclined of your kids to the state flagship university.

Especially since many Texans don't see the same love of Ivies that people do in other parts of the country.

In NJ, it felt like people were in awe of Ivies. I met people who refused to go anywhere but an Ivy (including one guy whose parents made him take a free ride to Rutgers versus paying to go to Columbia - he got smarter later, but he told me he was extremely angry at the time). Texas is almost the opposite. I know a guy who was turned down for a lateral transfer at his company because the hiring manager felt like his Ivy degree was too fancy.

UT has a pretty solid reputation as a public school and it made the family seem more accessible to the middle class since their kid was going to a school that many Texas kids want to go to.

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Re: Yale paid 6% expense ratio last year
« Reply #10 on: August 20, 2015, 01:39:16 PM »

 Hence why the president's daughters always manage to get a seat at their Ivy of choice.

So do you think Jenna Bush turned down spots at them or didn't get in? Her Bachelor's is from a public university in Texas (UT-Austin, a very good one.) Unlike Barbara she wouldn't have been able to get in on grades (I went to high school with them; I know this for a fact), but obviously would have gotten in on "my father is the sitting president".

She graduated high school in 2000, though, and thus would have only had that "father is sitting prez" if she transferred.

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Re: Yale paid 6% expense ratio last year
« Reply #11 on: August 20, 2015, 01:46:46 PM »

 Hence why the president's daughters always manage to get a seat at their Ivy of choice.

So do you think Jenna Bush turned down spots at them or didn't get in? Her Bachelor's is from a public university in Texas (UT-Austin, a very good one.) Unlike Barbara she wouldn't have been able to get in on grades (I went to high school with them; I know this for a fact), but obviously would have gotten in on "my father is the sitting president".

She graduated high school in 2000, though, and thus would have only had that "father is sitting prez" if she transferred.

I imagine that "my grandfather was president and my dad is governor of Texas and leading in the Republican primary for president and my uncle is the governor of Florida" carries some weight too.

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Re: Yale paid 6% expense ratio last year
« Reply #12 on: August 20, 2015, 02:00:43 PM »

 Hence why the president's daughters always manage to get a seat at their Ivy of choice.

So do you think Jenna Bush turned down spots at them or didn't get in? Her Bachelor's is from a public university in Texas (UT-Austin, a very good one.) Unlike Barbara she wouldn't have been able to get in on grades (I went to high school with them; I know this for a fact), but obviously would have gotten in on "my father is the sitting president".

She graduated high school in 2000, though, and thus would have only had that "father is sitting prez" if she transferred.

Yeah, I forgot when he was elected. We graduated the same year.    Her Dad was governor of Texas when she would have been doing the applications. (Not when she graduated.) And an Ivy legacy himself.
"My grandfather was president".  That seems pretty valid as well.


My guess is she didn't apply because she didn't want to do the work those schools require. But I do always wonder if she would have gotten in.  Quite honestly, UT was really hard to get into if you aren't  top 10% (now top 8%...as it has gotten harder), so I wonder if she did that without name recognition too.  (I worked in their admissions office for awhile, but it was way more than my job was worth to try to open her file!)
« Last Edit: August 20, 2015, 02:03:03 PM by iowajes »

nobodyspecial

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Re: Yale paid 6% expense ratio last year
« Reply #13 on: August 20, 2015, 02:08:18 PM »
That seems very high for an endowment as large as Yale's - but how does it compare to managed accounts at other universities? Or just other large managed accounts?

0.06 sounds way too low to expect for an account to be managed.
Except it scales inversely with the size of the endowment.
If I pay a genius investor $1M a year to manage my finances, that's a much larger percentage then paying the same guy $1M to manage $600M

EricP

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Re: Yale paid 6% expense ratio last year
« Reply #14 on: August 20, 2015, 02:09:38 PM »

 Hence why the president's daughters always manage to get a seat at their Ivy of choice.

So do you think Jenna Bush turned down spots at them or didn't get in? Her Bachelor's is from a public university in Texas (UT-Austin, a very good one.) Unlike Barbara she wouldn't have been able to get in on grades (I went to high school with them; I know this for a fact), but obviously would have gotten in on "my father is the sitting president".

She graduated high school in 2000, though, and thus would have only had that "father is sitting prez" if she transferred.

Yeah, I forgot when he was elected. We graduated the same year.    Her Dad was governor of Texas when she would have been doing the applications. (Not when she graduated.) And an Ivy legacy himself.
"My grandfather was president".  That seems pretty valid as well.


My guess is she didn't apply because she didn't want to do the work those schools require. But I do always wonder if she would have gotten in.  Quite honestly, UT was really hard to get into if you aren't  top 10% (now top 8%...as it has gotten harder), so I wonder if she did that without name recognition too.  (I worked in their admissions office for awhile, but it was way more than my job was worth to try to open her file!)

Where are you getting this top 10% from?  Just did a little Google Search and their Average SAT score is only 1873 and they have an acceptance rate of 40%.

beltim

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Re: Yale paid 6% expense ratio last year
« Reply #15 on: August 20, 2015, 02:37:22 PM »
Private universities shouldn't be obligated to spend a fixed percentage per year of their endowments. These large endowments are used for financing new buildings, expensive research initiatives, etc.; these aren't recurring expenses that can be set at an annual rate.

Then we can give them a little leeway in that they need to average X% over Y years, but if they're receiving tax perks and such for being universities, then I think it's perfectly reasonable that the government require they spend down their endowments even if they are private universities.

The most common rule for university endowments is spending 5% of the three-year average market value.  Yale currently targets 5.25% spending of its endowment, but allows a range of 4.5% to 6.0% to have funding stability.

The article is also incredibly disingenuous about only spending $170 million on students.  The endowment provided four times as much of the operating budget as tuition, and many of the other spending categories – professorships, lectureships, research, etc. – have the net effect of requiring lower tuition, or expanding "what you get" for the tuition. 

https://www.aau.edu/WorkArea/DownloadAsset.aspx?id=7792
http://investments.yale.edu/images/documents/Yale_Endowment_13.pdf

Psychstache

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Re: Yale paid 6% expense ratio last year
« Reply #16 on: August 20, 2015, 02:37:51 PM »

 Hence why the president's daughters always manage to get a seat at their Ivy of choice.

So do you think Jenna Bush turned down spots at them or didn't get in? Her Bachelor's is from a public university in Texas (UT-Austin, a very good one.) Unlike Barbara she wouldn't have been able to get in on grades (I went to high school with them; I know this for a fact), but obviously would have gotten in on "my father is the sitting president".

She graduated high school in 2000, though, and thus would have only had that "father is sitting prez" if she transferred.

Yeah, I forgot when he was elected. We graduated the same year.    Her Dad was governor of Texas when she would have been doing the applications. (Not when she graduated.) And an Ivy legacy himself.
"My grandfather was president".  That seems pretty valid as well.


My guess is she didn't apply because she didn't want to do the work those schools require. But I do always wonder if she would have gotten in.  Quite honestly, UT was really hard to get into if you aren't  top 10% (now top 8%...as it has gotten harder), so I wonder if she did that without name recognition too.  (I worked in their admissions office for awhile, but it was way more than my job was worth to try to open her file!)

Where are you getting this top 10% from?  Just did a little Google Search and their Average SAT score is only 1873 and they have an acceptance rate of 40%.

There is a policy in place that the if you graduate high school in the top 10% (now 8%) of your senior class, you are guaranteed admission into the University of Texas System. I believe that is what iowa was referring to.
« Last Edit: August 20, 2015, 02:39:39 PM by Psychstache »

EricP

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Re: Yale paid 6% expense ratio last year
« Reply #17 on: August 20, 2015, 02:56:14 PM »
Private universities shouldn't be obligated to spend a fixed percentage per year of their endowments. These large endowments are used for financing new buildings, expensive research initiatives, etc.; these aren't recurring expenses that can be set at an annual rate.

Then we can give them a little leeway in that they need to average X% over Y years, but if they're receiving tax perks and such for being universities, then I think it's perfectly reasonable that the government require they spend down their endowments even if they are private universities.

The most common rule for university endowments is spending 5% of the three-year average market value.  Yale currently targets 5.25% spending of its endowment, but allows a range of 4.5% to 6.0% to have funding stability.

The article is also incredibly disingenuous about only spending $170 million on students.  The endowment provided four times as much of the operating budget as tuition, and many of the other spending categories – professorships, lectureships, research, etc. – have the net effect of requiring lower tuition, or expanding "what you get" for the tuition. 

https://www.aau.edu/WorkArea/DownloadAsset.aspx?id=7792
http://investments.yale.edu/images/documents/Yale_Endowment_13.pdf

Yeah, I noticed that as well the second read through.  $1B in payouts to the operating budget, but most of that wasn't "direct support" stuff, but fin-aid and scholarships aren't inherently better than paying the professors as the author implied.  I mean, they *could* give out the entire $1B as direct aid to the students, but then they'd just end up raising tuition by that same $1B.

beltim

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Re: Yale paid 6% expense ratio last year
« Reply #18 on: August 20, 2015, 03:04:16 PM »
Private universities shouldn't be obligated to spend a fixed percentage per year of their endowments. These large endowments are used for financing new buildings, expensive research initiatives, etc.; these aren't recurring expenses that can be set at an annual rate.

Then we can give them a little leeway in that they need to average X% over Y years, but if they're receiving tax perks and such for being universities, then I think it's perfectly reasonable that the government require they spend down their endowments even if they are private universities.

The most common rule for university endowments is spending 5% of the three-year average market value.  Yale currently targets 5.25% spending of its endowment, but allows a range of 4.5% to 6.0% to have funding stability.

The article is also incredibly disingenuous about only spending $170 million on students.  The endowment provided four times as much of the operating budget as tuition, and many of the other spending categories – professorships, lectureships, research, etc. – have the net effect of requiring lower tuition, or expanding "what you get" for the tuition. 

https://www.aau.edu/WorkArea/DownloadAsset.aspx?id=7792
http://investments.yale.edu/images/documents/Yale_Endowment_13.pdf

Yeah, I noticed that as well the second read through.  $1B in payouts to the operating budget, but most of that wasn't "direct support" stuff, but fin-aid and scholarships aren't inherently better than paying the professors as the author implied.  I mean, they *could* give out the entire $1B as direct aid to the students, but then they'd just end up raising tuition by that same $1B.

Exactly.  The author also ignores the point that Yale does far, far more than educate undergraduates.  Its research enterprise and medical school and hospital both account for a larger percentage of its budget than undergraduate education.

forummm

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Re: Yale paid 6% expense ratio last year
« Reply #19 on: August 20, 2015, 04:52:52 PM »
Private universities shouldn't be obligated to spend a fixed percentage per year of their endowments. These large endowments are used for financing new buildings, expensive research initiatives, etc.; these aren't recurring expenses that can be set at an annual rate.

Then we can give them a little leeway in that they need to average X% over Y years, but if they're receiving tax perks and such for being universities, then I think it's perfectly reasonable that the government require they spend down their endowments even if they are private universities.

The most common rule for university endowments is spending 5% of the three-year average market value.  Yale currently targets 5.25% spending of its endowment, but allows a range of 4.5% to 6.0% to have funding stability.

The article is also incredibly disingenuous about only spending $170 million on students.  The endowment provided four times as much of the operating budget as tuition, and many of the other spending categories – professorships, lectureships, research, etc. – have the net effect of requiring lower tuition, or expanding "what you get" for the tuition. 

https://www.aau.edu/WorkArea/DownloadAsset.aspx?id=7792
http://investments.yale.edu/images/documents/Yale_Endowment_13.pdf

Yeah, I noticed that as well the second read through.  $1B in payouts to the operating budget, but most of that wasn't "direct support" stuff, but fin-aid and scholarships aren't inherently better than paying the professors as the author implied.  I mean, they *could* give out the entire $1B as direct aid to the students, but then they'd just end up raising tuition by that same $1B.

Exactly.  The author also ignores the point that Yale does far, far more than educate undergraduates.  Its research enterprise and medical school and hospital both account for a larger percentage of its budget than undergraduate education.

Ivy league schools don't exist to educate undergraduates. They exist to do research and collect large donations and have a prestigious name. They keep the undergraduates around in part because that helps with the donations mission.

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Re: Yale paid 6% expense ratio last year
« Reply #20 on: August 20, 2015, 05:22:06 PM »

Ivy league schools don't exist to educate undergraduates. They exist to do research and collect large donations and have a prestigious name. They keep the undergraduates around in part because that helps with the donations mission.

Most universities exist to do research.  They need the large donations and undergrads to do it.
That is not just an Ivy League thing.

beltim

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Re: Yale paid 6% expense ratio last year
« Reply #21 on: August 20, 2015, 05:54:13 PM »
Exactly.  The author also ignores the point that Yale does far, far more than educate undergraduates.  Its research enterprise and medical school and hospital both account for a larger percentage of its budget than undergraduate education.

Ivy league schools don't exist to educate undergraduates. They exist to do research and collect large donations and have a prestigious name. They keep the undergraduates around in part because that helps with the donations mission.

The ratio depends on the Ivy, but all of the Ivies view undergraduate education as part of their mission.  It's just not their only mission.

forummm

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Re: Yale paid 6% expense ratio last year
« Reply #22 on: August 20, 2015, 06:12:11 PM »
Of course I was being intentionally hyperbolic...but only slightly. Yes, teaching is part of the mission of major research universities. But approximately 0 professors get tenure because they are amazing at teaching even though they never publish. It's about 98% a of the job to be a world class researcher.
« Last Edit: August 20, 2015, 06:14:32 PM by forummm »

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Re: Yale paid 6% expense ratio last year
« Reply #23 on: August 20, 2015, 08:19:58 PM »
My brother in law is with a hedge fund that invests for Yale. I doubt they are charging 6% more like the standard 2 and 20.

Yale has handily beaten the public markets over the past few decades, ever since David Swenson took over. A large part of the outperformance was their big bet in private equity and hedge funds before they became popular. They may pay some fees but they have the performance to back up their bets.


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beltim

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Re: Yale paid 6% expense ratio last year
« Reply #24 on: August 20, 2015, 09:17:38 PM »
Of course I was being intentionally hyperbolic...but only slightly. Yes, teaching is part of the mission of major research universities. But approximately 0 professors get tenure because they are amazing at teaching even though they never publish. It's about 98% a of the job to be a world class researcher.

While true, that also neglects the number of teaching faculty, lab managers, tutors, and teaching assistants, which at every Ivy exceed the tenured faculty, possibly by an order of magnitude.

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Re: Yale paid 6% expense ratio last year
« Reply #25 on: August 21, 2015, 08:29:48 AM »

 Hence why the president's daughters always manage to get a seat at their Ivy of choice.

So do you think Jenna Bush turned down spots at them or didn't get in? Her Bachelor's is from a public university in Texas (UT-Austin, a very good one.) Unlike Barbara she wouldn't have been able to get in on grades (I went to high school with them; I know this for a fact), but obviously would have gotten in on "my father is the sitting president".

She graduated high school in 2000, though, and thus would have only had that "father is sitting prez" if she transferred.

Yeah, I forgot when he was elected. We graduated the same year.    Her Dad was governor of Texas when she would have been doing the applications. (Not when she graduated.) And an Ivy legacy himself.
"My grandfather was president".  That seems pretty valid as well.


My guess is she didn't apply because she didn't want to do the work those schools require. But I do always wonder if she would have gotten in.  Quite honestly, UT was really hard to get into if you aren't  top 10% (now top 8%...as it has gotten harder), so I wonder if she did that without name recognition too.  (I worked in their admissions office for awhile, but it was way more than my job was worth to try to open her file!)

Where are you getting this top 10% from?  Just did a little Google Search and their Average SAT score is only 1873 and they have an acceptance rate of 40%.

There is a policy in place that the if you graduate high school in the top 10% (now 8%) of your senior class, you are guaranteed admission into the University of Texas System. I believe that is what iowa was referring to.

Technically the policy was if you graduated from the top 10% (sounds like 8% now) of your Texas high school senior class, you had guaranteed admission into any public university in the state of Texas. It was a pretty effective way for Texas to increase minority admissions without requiring a policy that could be considered a quota.

UT ended up in a weird spot since the students under that policy pretty much filled up their freshman classes, not leaving a lot of spots for out of state or talented students outside of the top 10%.

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Re: Yale paid 6% expense ratio last year
« Reply #26 on: August 21, 2015, 08:31:55 AM »

 Hence why the president's daughters always manage to get a seat at their Ivy of choice.

So do you think Jenna Bush turned down spots at them or didn't get in? Her Bachelor's is from a public university in Texas (UT-Austin, a very good one.) Unlike Barbara she wouldn't have been able to get in on grades (I went to high school with them; I know this for a fact), but obviously would have gotten in on "my father is the sitting president".

She graduated high school in 2000, though, and thus would have only had that "father is sitting prez" if she transferred.

Yeah, I forgot when he was elected. We graduated the same year.    Her Dad was governor of Texas when she would have been doing the applications. (Not when she graduated.) And an Ivy legacy himself.
"My grandfather was president".  That seems pretty valid as well.


My guess is she didn't apply because she didn't want to do the work those schools require. But I do always wonder if she would have gotten in.  Quite honestly, UT was really hard to get into if you aren't  top 10% (now top 8%...as it has gotten harder), so I wonder if she did that without name recognition too.  (I worked in their admissions office for awhile, but it was way more than my job was worth to try to open her file!)

Where are you getting this top 10% from?  Just did a little Google Search and their Average SAT score is only 1873 and they have an acceptance rate of 40%.

There is a policy in place that the if you graduate high school in the top 10% (now 8%) of your senior class, you are guaranteed admission into the University of Texas System. I believe that is what iowa was referring to.

Technically the policy was if you graduated from the top 10% (sounds like 8% now) of your Texas high school senior class, you had guaranteed admission into any public university in the state of Texas. It was a pretty effective way for Texas to increase minority admissions without requiring a policy that could be considered a quota.

UT ended up in a weird spot since the students under that policy pretty much filled up their freshman classes, not leaving a lot of spots for out of state or talented students outside of the top 10%.

Some of the state schools are like that. I've heard that it is easier to get into Harvard than it is to get into UNC if you aren't an athlete.

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Re: Yale paid 6% expense ratio last year
« Reply #27 on: August 21, 2015, 08:54:33 AM »

Technically the policy was if you graduated from the top 10% (sounds like 8% now) of your Texas high school senior class, you had guaranteed admission into any public university in the state of Texas. It was a pretty effective way for Texas to increase minority admissions without requiring a policy that could be considered a quota.

UT ended up in a weird spot since the students under that policy pretty much filled up their freshman classes, not leaving a lot of spots for out of state or talented students outside of the top 10%.

I believe the 8% is just for UT-Austin.  All the other public universities are still 10%.
I remember being worried about my admission into UT because I was the first person outside the top 10% (so, top 11%), but I did get in. I had many friends with impeccable SAT scores, tons of AP classes, but in say the top 11-15% not get in. They were pretty shocked because we were among the first years that the entire freshman class was filled from this policy.  UT was always just a given.  I had one friend "settle" for Brown because she couldn't go to UT.

I found out that Iowa has the same sort of policy for it's high school grads, except it is automatic admission if you graduate in the top 50%!   Which is part of the reason why I kind of want to get my Texas residency back before my kids are ready for college. The standards for the flagship universities are so much higher!


Sorry for the hijack.  I'm still interested to know what the ER other universities are paying. I think Yale might not be as outrageous as it sounds.  Also, I think the government mandating how they spend down their endowments seems ridiculous. Yale offers pretty generous financial aid to those who need it.

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Re: Yale paid 6% expense ratio last year
« Reply #28 on: August 21, 2015, 09:24:54 AM »

Technically the policy was if you graduated from the top 10% (sounds like 8% now) of your Texas high school senior class, you had guaranteed admission into any public university in the state of Texas. It was a pretty effective way for Texas to increase minority admissions without requiring a policy that could be considered a quota.

UT ended up in a weird spot since the students under that policy pretty much filled up their freshman classes, not leaving a lot of spots for out of state or talented students outside of the top 10%.

I believe the 8% is just for UT-Austin.  All the other public universities are still 10%.
I remember being worried about my admission into UT because I was the first person outside the top 10% (so, top 11%), but I did get in. I had many friends with impeccable SAT scores, tons of AP classes, but in say the top 11-15% not get in. They were pretty shocked because we were among the first years that the entire freshman class was filled from this policy.  UT was always just a given.  I had one friend "settle" for Brown because she couldn't go to UT.

I found out that Iowa has the same sort of policy for it's high school grads, except it is automatic admission if you graduate in the top 50%!   Which is part of the reason why I kind of want to get my Texas residency back before my kids are ready for college. The standards for the flagship universities are so much higher!


Sorry for the hijack.  I'm still interested to know what the ER other universities are paying. I think Yale might not be as outrageous as it sounds.  Also, I think the government mandating how they spend down their endowments seems ridiculous. Yale offers pretty generous financial aid to those who need it.

To turn the hijack back on topic, UT and A&M have the Permanent University Fund which (in true Texas fashion) is heavily built on oil, gas, and other mineral rights. There are also some fiduciary assets. Per this, it looks like fees in 2008 were 0.22%.

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Re: Yale paid 6% expense ratio last year
« Reply #29 on: August 21, 2015, 09:32:26 AM »
Also, I think the government mandating how they spend down their endowments seems ridiculous. Yale offers pretty generous financial aid to those who need it.

Well, the author is only calling that we mandate that they spend it, not how they spend it.  And we already mandate that other non-profits spend their assets at 5% per year, so it seems perfectly reasonable that if a university wants tax benefits that they spend their assets as well.

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Re: Yale paid 6% expense ratio last year
« Reply #30 on: August 21, 2015, 09:46:58 AM »
I used to caddy for a guy who managed at least part of Harvards endowment. From what he told me, he wasn't making much percentage wise on it. But he was probably making at least $2.5MIL a year on that account alone. I went looking for his website once. It was a basically blank page, with the name of the company and 2 links. One link was to a log-in. The other was an "About us". The about us page had two sentences. The first was that they manage money. The second said that if you have enough money for them to be interested, they will find you.

This guy was very generous, very nice, and very smart. If I won the lottery I would be going straight to him with at least half of it.

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Re: Yale paid 6% expense ratio last year
« Reply #31 on: August 21, 2015, 10:08:39 AM »

To turn the hijack back on topic, UT and A&M have the Permanent University Fund which (in true Texas fashion) is heavily built on oil, gas, and other mineral rights. There are also some fiduciary assets. Per this, it looks like fees in 2008 were 0.22%.

Very interesting. Thank you!


nobodyspecial

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Re: Yale paid 6% expense ratio last year
« Reply #32 on: August 21, 2015, 12:11:19 PM »
Quote
There is a policy in place that the if you graduate high school in the top 10% (now 8%) of your senior class, you are guaranteed admission into the University of Texas System.
Does that get gamed?
Do you get special parents transferring their kids to some inner-city school the day before they sit the SATS - so they score higher relative to the class ?

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Re: Yale paid 6% expense ratio last year
« Reply #33 on: August 21, 2015, 12:13:39 PM »
Quote
There is a policy in place that the if you graduate high school in the top 10% (now 8%) of your senior class, you are guaranteed admission into the University of Texas System.
Does that get gamed?
Do you get special parents transferring their kids to some inner-city school the day before they sit the SATS - so they score higher relative to the class ?

Yes, it gets gamed, but probably not as much as the 1-year scholarship that goes to the highest ranking graduate (though the school gets to define that, so it may or may not be valedictorian)- but it has to do with your rank in the class upon graduation. Nothing to do with test scores. 

The thing with the 8% rule is moving could put you at a disadvantage to AP courses offered and such; and since all it does is get you admission, not scholarship- most serious students want to be able to take AP classes so they don't have to do weed out classes in college.

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Re: Yale paid 6% expense ratio last year
« Reply #34 on: August 21, 2015, 02:39:22 PM »
My brother in law is with a hedge fund that invests for Yale. I doubt they are charging 6% more like the standard 2 and 20.

I calculated it from this statement in the article:

Quote
Last year, Yale paid about $480 million to private equity fund managers as compensation — about $137 million in annual management fees, and another $343 million in performance fees, also known as carried interest — to manage about $8 billion, one-third of Yale’s endowment.

$480M / $8B = 6%

I guess the "2" was that $137M "annual management fee" and the "20" was that $343M "performance fee," and that the fund returned enough that 20% of the growth equaled about 4% of the total assets.

In other words, it was effectively 6% this year, just not necessarily 6% all the time (as my characterization of it as an "expense ratio" would imply).



Still, even the "standard 2 and 20" is a gigantic fee, and I have a very hard time believing that even the most skilled hedge fund manager on the planet could have that much sustainable (i.e., not due to dumb luck) outperformance over multiple decades without some kind of underhanded shenanigans going on.

hodedofome

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Re: Yale paid 6% expense ratio last year
« Reply #35 on: August 21, 2015, 02:47:45 PM »
You are most likely correct on your calcs of the expenses.

Although quite a few institutional investors don't invest with hedge funds because they are trying to beat the S&P 500, rather they invest in hedge funds because they are looking for uncorrelated returns and specific amounts of volatility, however there are many that can't even do this right. Some of them earn their fees however.

Yale invests in my bro in laws fund because they want long only exposure to small oil and gas E&Ps, with a value investing strategy. There is not a low cost ETF that provides this so they are ok with the fees apparently.


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Re: Yale paid 6% expense ratio last year
« Reply #36 on: September 04, 2015, 01:17:31 PM »
If you want an interesting read you should check out the financial reports for Harvard.

Harvard:
http://finance.harvard.edu/files/fad/files/har_fy14_financialreport.pdf
$36.4b in endowment 15.4% 1 yr return, 11.6% annualized 5 year return, and 12.3% annualized 40 year returns.

I used to work for a foundation who managed the endowment for a small local university.  We used alternative investments as a way to achieve sustainable returns.  This did mean that we lagged the market on the good years, but would significantly out perform the market in the bad years.  They moved to this model after the market crash in 2008 so it has not yet been tested in a market downturn.