How US Universities Became Glorified Hedge Funds 

What caught my eye was that a UK university student now owes more on average than a US one

Less than 100 colleges have an endowment of over $1bn, just 2.5% of all of the 4000 in the US. It's incorrect to say that most have over $1bn.

The inital music is annoying and makes it harder to hear you

The background music for the 1st minute is horrible. It clashes with your voice so much it makes it impossible to concentrate on what you're saying. I had to pause the video multiple times to make sure I wasn't going crazy or it was coming from another tab.

Ironic that they are sources of knowledge yet produce sub-par performances in they’re endowments. One would think that they would employ or tap all the lecturers and students to give them an edge in the markets.

I'm favoured, $27K every week! I can now give back to the locals in my community and also support God works and the church. God bless American .

On May 2nd, Scott Galloway's TED talk was posted to the TED RU-vid channel. In it, he said that universities had become hedge funds that taught classes and did research. He was not amused.

I can't for the love of me comprehend why university endowment funds need to be managed by finance "professionals" when they can be run much more efficiently under the supervision of the university's own senior finance and economics academicians who publish research that these finance "professionals" themselves employ?!

You didn’t mention the university endowments tax free status. Which I believe should be stripped away at this point.

very pleasant and informative life. increasing your income should always be our priority objective to enable a good retirement. passive income plays a vital role in getting rich that's why I always make sure to invest in others to earn that have paid off a lot

It's so interresting to see how both UK and US economy have evolved more and more during the last 40 years into systems that focus in producing money without producing goods or services. It's not surprising that such environment creates people with absolutely no notion of how an economy works and who fall in such large numbers for cryptos and meme-stocks...

Music clashes with your voice before the intro

Very well said. Never thought of it that way but they could literally just put all those funds in index funds. They would make more profit and pay way less in fees!

I think the students have a good point when they question how the endowments are invested. There’s a fundamental conflict between the values presumably held by the universities and the questionable ways they support and enable the very things they deplore.

Imagine paying 60% of profits to Hedgefunds and still underperforming the market all while holding education (young peoples real only way to any kind of economic mobility) hostage and being praised as the 'best universities in the world' in rankings still 😖😖

My pastor when I was a kid went to Princeton Theological Seminary and once told me at the time the seminary had the second-largest endowment of any religious institution in the world after only the Vatican…

You would think someone would just say, "Reverse what Swinson did since it failed, go back to bonds."

Erm, US private universities often do receive generous federal grants.

I like how this channel is more in-depth in its analysis than your other channels!

I don't think there is anything wrong with investing the endowment money, but the problem is they overpay fee AND underperformed. Like the video said, if that's the case, then they should have just used a diversified set of index funds.

It's very clear that low cost index funds outperform active investing in the average case. So it's pretty ironic that universities choose active investing. Of course it's obviously just corrupt. But assuming it wasn't it's silly.

Transparency is the key here. This will cause pressure by students and academics choosing different universities

Universities investing the money they got into stocks and funds instead of teaching and researching. Another facet of the Squeeze.

half the countries on that map have a gdp over $50 billion?

Answer: politicians and capitalism selling masses down the river.

Saying MIT is part of Ivy League is like saying UCL is part of Oxbridge. Ivy League has nothing to do with ranking but all about a sports competition. Stanford, UChicago, Rice, Northwestern, Duke all are top private universities in top 10-12 in the country which are better than many of the Ivy League universities. This is a thing which most people don’t get but people at TLDR should know.

Jeez the music is annoying

Thanks TLDR Business Daddies

Scott Galloway has some really good ideas for how to deal with this

Please cut the backround music. We come here to cut and dry, factual news. You guys excel at this where most news outlets fail.

Awesome video! Great explainer about how it all works.

Why do alumni donate to their universities anyway? You already paid your tuition. I'd understand it somewhat if it those donations were invested directly into the university, but what's the point of bolstering an already enormous investment portfolio?

Music sound bed is a Chet Faker soundalike

Before even watching the video: Money is involved = nothing will change

Shocking theory but maybe perhaps universities shouldn't be for profit because it inherently requires de prioritizing students & education

This is super important

Just pointing out a small error. MIT is not an ivy league institution.

They can still be good at being a hedge fund, but that doesn't mean they should. If investing in things that makes the world worse pays more, it still an incorrect choice even if they can do it better than teaching.

Should've just put it all in the S&P 500, lmao.

Endowments not beating the market is expected since the investment strategy would be trading off maximum growth for downside protection "hedging". In theory the lower yeilding investments would be better in an econmonic pull back compared to an index fund.

Say what you want about whether this should be possible or not, but IMO Universities should invest in volatile long term stuff. Like Green Transition technologies, space etc. If they play the same game as the banks, the system gets locked in. Universities shouldn't just educate to fuel a boring system with workers, but to push the boundaries. If they don't do that, we leave it to chance and bored billionaires. Edit: also investing in scholarships for entrepreneurial poor students so they can afford to try and make a company and not become salary slaves for 40 years to pay off their student loans (and investing in their companies). Its like these funds are just numbers and percentages to them. Completely detached from reality

Interesting angle I thinknonce you are sitting on a pile of assets.which you neee them to generate returns, you will bexome your own hedge fund at some point The investment returns should go towards lowering fees, general upkeep of the insititutions and advancements if academic research

2:39 Uhh, no, MIT is not in the Ivy League. It's an elite university, but it's not an Ivy. That take like 2 seconds to Google search 😬😬

Who's gonna tell this guy that MIT isn't an Ivy

7:07 Is there a Wits in America or was that a editing error?

Am I the only one who couldn't hear the first minute's music at all?

Seems you've been taking notes from the last viral TED Talk.

that background music is terribly annoying.

It seems like this video is conflating several separate but related topics. First, I think the idea of an endowment makes sense and director donations towards it can be a good idea. That way, instead of the donation having a one-time good, it can be invested with the gains from that investment doing good for many years/decades into the future. Though I am curious how much the universities withdraw every year from the endowment to help with expenses. If it's 3-4%, that would probably make sense; less than that, then they are just hoarding it. The poor returns really does show that they are being managed poorly. I get that universities might not be experts in investments, but standard passive investing should work well. Put most of it in a diversified stock index fund for long-term return and put some in corporate and government bonds for short-term stability. Though if the universities have board members pressuring the university to make these complicated investments through the companies, the board members have connections to...that's where the issue is - a conflict of interest. There's also the question of if the universities have these endowments that are growing, and at least in theory should be producing more investment gains to cover the university's expenses, then why are tuition costs continuing to rise? Poor investing performance might be part of the issue, but there's a bigger issue of high university costs. I've heard that this is because of higher admin and overhead costs, but I'm not knowledgeable enough to comment on the details. That would be a good video topic though. The topic of Ken Griffin withholding donations to pressure schools also seems separate from the topic of endowments. He's trying to use his financial leverage to get the schools to do what he wants, but this would be true whether or not the universities were using endowments.

There are only four ways to arrive at a large endowment relative to the size of the school: 1-Donors contributed a shitload, 2-The school overcharged students and put the remainder into the endowment, 3-The endowment was long assets while the Fed destroyed the dollar, or 4-The fund managers did their jobs and delivered outsized returns. The answer is probably #3 tbh

In general, universities serve a couple of purposes. First, and foremost, they are the habitat of academics - traditionally people who work on topics that are not profitable but nevertheless drive growth (think graph theory being a niche branch of mathematics before our current world of GPS made it essential). Secondly, they're there to educate the next set of experts, as well as train "niche" skills to people looking to enter better paid jobs. Thirdly, they act as places to explore societal issues, with discourse between the young (students) and the old (academics) helping bridge ideas between generational gaps. Universities are not, by their nature, designed to make a profit; they are designed to profit the nation in which they sit by providing more workers able to work in high value-adding niche industries. They also profit society as a whole from the notions that arise from them. If you're running a university for profit, you're doing it wrong.

Ty for covering this. It has been largely ignored / buried in the US bc the powers that be don't like it.

error : they have labelled Greenland as a country

University of Illinois spotted :)

"Became"? Also... just the US?

MIT is NOT an Ivy League university.

Public schools also have endowments.

I’m wondering if there are connections between those finance people and the universities. Bet there are conflicts of interest.

Insane if you couple this video with the uk universities going broke video

The background music is really jarring

I wouldnt even say they are good at teaching. My uni never cared about its students. The university only goal is to maintain a steady and consistent flow of revenue. The jobs they offered where absolute shit. I got a finance degree yet im working as a waiter its fucking bs

Get rid of the music lol

Commenting 4 algorithm

Depends on what laws allowed in the state they are in.

Claudine Gay was asked to step down because she refused to confirm that calling for the genocide of Jews constituted misconduct on her campus. Not because she refused to condemn anti-Israel protests on campus.

They have to pay for retirement benefits somehow

Couple of things -there's no question that these should just be index funds, theres no reason for all the investment efforts -the hedgefundification is something affectinf the giant Ivys and the like, its not widespread, but the most messed up achools are definitely the worst examples -Claudine Gay didnt get forced out for "not condemning anti-Israel protests" FFS, come on. The newest congressional report lays out exactly how intentionally inactive she was around serious Jewish student issues including direct violence - Israeli companies make up a miniscule portion of the US stock market and most US universities already don't invest in things like military manufacturers, making this as per usual a big show -I don't understand the logic that students should have any authority around how their colleges are run, it seems like putting the inmates in charge of the asylum, but clearly that's an approach a lot of these schools are into... From my perspective, it isnt working oit for them, but in the end its their choice

7:02 So the hedge fond did something good here

I think it's disingenuous to compare capital with GDP. GDP is a sort of a yearly income/expsense measure, not a measure of wealth. If you wanted to compare Harvard's endowment fund with countries' GDP, you'd have to make an assumption for the yearly ROI of that fund and multiply that by the size of the fund. In that sense, Harvard generates more or less as much wealth each year as a small and impoverished African State. Which is still a lot of money!

are you implying there is an index fund that isn't associated with israel?

Keiretsu patterns

MIT is not part of the Ivy League.

Skip da ad 9:15

Well they do need to make 😂money if y😢u want them to provide scholarships and 😅facilities improvements 😅

What is this goofy as sound

I'm going to be blunt, you guys don't know what you're talking about. Well ok, the part about becoming hedge funds, that's right. But there's the not so secret dirty little secret about universities. They're research institutes that do undergrad education on the side because they have to.(And it shows) Speaking as someone that went to a private uni in the late 80's early 90's I can tell you that they weren't even good at it and they didn't want to do it. What they and the professors really cared about was research and getting research grant money and publishing. So if anybody figured they'd get a better (or even good) education by going to a top US research university be prepared to be disappointed while your professors basically ignore you. (I'm a bit jaded, it would have been nice if universities really wanted to do undergrad education but they simply don't and I wish I had known this before I attended.) Anyway I figure everyone is better off knowing the truth than some deluded fantasy. (Sorry to be the bearer of bad news.)

MIT is not Ivy League

1:46 what is this goody ah chart algeria and Bangladesh have several times that of gdp

MIT is not Ivy League. WTF

✋✋ Philippines

Anti Israel protests, not pro palestine.

That stupid background music is distracting please stop

1:48 I think uzbekistan and Bangladesh GDP is well over 50 billion dollars

Small correction: MIT is not an Ivy League (despite it being more prestigious than Cornell, Dartmouth, or Brown). The way to remember this is that no city has two Ivy Leagues and Harvard and MIT are both in Cambridge.

Why do you people put up absurd charts, do really think bangladesh have a gdp less than 50 Billion dollars

"Maths" Spoken like a true Brit. 🧐

running educational institutions causes money and it can't solely be dependent on government funding and tuition fees as source of money or purely through donations.

Another US focused video? When is the full stars and stripes rebrand happening?

You guys leaving out that Claudine Gay committed plagarism in basically everything she'd ever written is a pretty major (biased, even?) oversight. Granted, I'm not a fan of the pro-Israel pressure being applied to universities, but that woman is/was a travesty in her own right. Even worse that she was retained on tenure as a professor after being forced to resign as president. A student would've been kicked out of university if they'd plagarized that much - the punishment should be even more severe for a faculty member who did the same.

$1 billion dollars really isn’t that much for a large institution. It would probably only cover a year or two of operations.

The amount of bad takes in this video is stunning. I'm really surprised as you tend to get it right most of the time. Here are 5. 1. (1:43) "University endowments are unbelievably massive, with most worth more than $1B". - That is not accurate. While the AVERAGE is $1.2B, that is skewed by the Harvard's of the world, and the median actually being ~$200M or around 5X less. 2. (1:50) "The biggest, Harvard, is worth more than $50B, which is more than the total GDP of 120 countries". You just compared a university's savings (endowment) to countries' incomes (GDP), these are not comparable. You should be comparing income to incomes, and Harvard's last year was $6B, which is far less than the $50B you're referencing. 3. (4:03) "A 2022 working paper from economist George Bulman found that spending of endowment profits on student aid was statistically insignificant". Yes, its statistically insignificant, but actually very significant in general. The net cost of these top universities like Harvard is $15K, largely subsidized by endowment profits. "Scholarships" are different than need-based aid, and including need-based aid, shows that these top universities in particular have done a remarkable job of capping student cost, very much thanks to donations and their endowment performance. 4. (4:25) "Universities are sitting on huge piles of cash while simultaneously squeezing students and academics dry." What is that based on? Is there data-based evidence of this? 5. (4:53) "The average university endowment underperformed the market in 12 of the last 15 years." You're cherrypicking years to make a point. Overall, while the return is "unexceptional", it has beaten the stock market, and certainly the bonds that you mentioned previously.

Miss Gay was asked to step down because she plagiarized multiple papers. The mere fact you didn’t even mention that for why she was fired is concerning.

when i was young in india i wanted to go to usa now YOU CANT PAY ME TO GO IN THAT SHIT HOLE

💪🇮🇱❤️

The bias in this video is frankly insulting.... most private universities do not have endowments worth over a billion dollars (no idea where you got that number, but it's hilariously high), board seats at American universities have always had a strong representation of professionals from the financial sector (especially if those universities have strong or highly publicized business faculties - which many do), and to insinuate that Claudine Gay had to step down from Harvard's presidency because of her stance on Israel (ignoring the fact that her specific comments in her Congressional testimony were not about Israel but about Jewish people, thereby making them antisemitic, not 'resisting calls to condemn anti-Israel demonstrations') and not the repeated and serious cases of plagiarism in her academic work, is just plain misinformation. The increase in the 'editorializing' of your videos to consistently pass off your opinions as news in the last six months has been disheartening to say the least. TLDR used to be a fairly objective source that I could get fairly unbiased updates from, but that reality seems to increasingly be from a long time ago, with little chance of returning.

@ 06:57 This is a very misleading sentence. She resigned not because she "refused to condemn anti-israel protests" but because she refused to answer if calling for the genocide against the Jews is against the university policy.

You've totally missed the real issue related to the third-world encampments on US campuses - foreign funding

I'm sorry, but this video was quite bad. You tried to scandalized donors, pausing their donations, but donations are meant be voluntary. It's their complete right, to stop donating, when they think the university goes in the wrong way. Moreover, you should mention bds without explaining their antisemitism

Instead of universities relaying in donations and hedges funds why not simply increase taxes to the rich which benefits more os skill labour and make an independent and less costly for people. Oh i remember we live in capitalism and this is one of the forms of opresion throw economic power

Man isn't Capitalism great /s