You gotta love it. The top-performing university endowments over the past 10 years haven’t belonged to prestigious giants like Harvard and Stanford, nor have they been run by super-sophisticated hedge fund and venture capital billionaires. They belong to two universities in Southwest Virginia largely unknown outside the Old Dominion. Radford University, with an endowment of $55.5 million, generated the highest return on its endowment from 2006 to 2015, according to the National Association of College and University Business Officers-Commonfund study of endowment performance. Southern Virginia University, with an endowment of $1.1 million, ranked second.
That’s first and second in the nation, folks.
Radford performed extremely well, but not the best, for the change in endowment between 2014 and 2015, with an 11.6% gain, a year when many endowments lost money. Southern University kicked butt with as 27.7% gain. The study didn’t provide their 10-year performance numbers, but James B. Stewart, writing for the Washington Post, said that “people who know the results,”informed him that the two Southwest Virginia institutions were the top performers over the 10-year period. Radford had an annualized 12.4% return, while Southern Virginia made 11.2%.
Southern Virginia achieved its results by investing in individual stocks and low-cost index funds. The endowment, run by Controller Jesse Seegmiller, does not rely upon outside advisers. Imagine that, investing for Seegmiller is a part-time job!
Radford owes much of its success to the University of Richmond. Eighty percent of the Southwest Virginia university’s endowment is co-existed with that of the much larger University of Richmond endowment. UR’s overall performance was considerably lower than RU’s because its investments are spread over a number of outside funds. Radford was fortunate to have its assets in a fund directly managed directly by UR’s foundation.
As Stewart rightly writes: “The biggest endowments have long maintained that their size and prestige give them access to the top-performing hedge funds, private equity managers and venture firms, something that smaller schools can’t replicate. That may still be the case, but the success of small endowments like Southern Virginia’s suggest that they can outperform even their largest and most prestigious rivals by sticking to lower-cost strategies.”
Bacon’s bottom line: Chalk up a victory for the little guy. Let’s cross our fingers and hope that Southern Virginia and Radford (with a little help from UR) can duplicate their performance over the next 10 years!
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