University Endowments Invest in Hedge Funds

"We're not allowed to say the `H' word," confirms Jay Yoder, an investment analyst at the $380 million Vassar College endowment. In the ivory tower world of endowment management, managers are mostly concerned with preserving capital. To overcome the perception of hedge funds as risky vehicles that could lead to big losses, officials often refer to them instead as "partnerships," "alternative investments," or "absolute return strategies," says Yoder, who was a senior analyst at consultant SEI Corporation before moving to academia in 1994. Yet Vassar allocates 12% of its endowment to four different "H" vehicles.