Howard Marks, the billionaire and hedge fund manager of Oaktree Capital and the former chairman of UPenn’s endowment fund, recently wrote trustees a note that would make any Penn grad proud.
Penn’s endowment fund is beating Harvard’s and Yale’s this year.
So the note was about how Penn beat the two schools usually named the top endowment funds, and there is a bit of (deserved) gloating.
Penn dodged the hundreds of layoffs, construction delays, discounted sales of illiquid investments and debt issuance of several of its peer institutions because the university was less dependent on its fund, getting 10 per cent of its budget from endowment earnings, Marks said. In comparison, Harvard and Yale get more than one-third of their budgets from endowment income.
“Never forget the 6-foot-tall man who drowned crossing the stream that was 5 feet deep on average,” Marks said. “Prudent financial management doesn’t get you through ‘on average’ — rather, it enables you to survive the low points.”
Read more from the letter in Bloomberg, which got (but didn’t post) a copy >