Yale University is sitting on almost $1 billion of cash in its endowment as the school seeks out new investments.
Yale, one of the world's wealthiest universities, was holding 3.5% of its $23.9 billion endowment in cash as of June 30, up from 1.6% the previous year, the university said in an investment report. The increase represents a reversal for Yale — going into the global credit crisis, the allocation reached a low of -3.9% in 2008, meaning it was borrowing money to boost returns.
The growing cash pile might be the result of Yale getting bigger payouts from private equity and real estate investments, as well as its decision to further cut holdings of U.S. stocks, said William Jarvis, managing director of the Commonfund Institute. Tom Conroy, a spokesman for the university in New Haven, Conn., didn't return a call and e-mail seeking comment.
“We may have a situation where private equity is giving off cash and they haven't quite figured out where to put it,” said Mr. Jarvis, whose company oversees investments for non-profits. “They're probably looking at a bunch of things.”
Many universities boosted the amount of cash they keep on hand after the credit crisis, when steep investment losses in 2009 left them struggling to find money in their endowments to subsidize academic operations. Yale was among the wealthier institutions forced to borrow money to increase liquidity, selling $1 billion of bonds in 2009.
A number of investors are holding increasing amounts of cash because they are concerned about stock market declines, said Timothy Ng, chief investment officer at Clearbrook Global Advisors. He said almost $1 billion might not be enough for Yale given how the rest of its portfolio is so illiquid.
“Should there be a major correction, how are they going to come up with the cash?” Mr. Ng said.
