CURRENT TENDENCIES IN COLLEGE INVESTMENTS

Abstract

The total book value of all college endowment funds is about $1.8 billion. By way of contrast, commercial banks have $150 billion of assets, life insurance companies $55 billion, mutual savings banks $20 billion, and fire and casualty companies about $10 billion. Thus the commercial banks have over 80 times as much money to handle as colleges, life companies 30 times as much, mutual savings banks 11 times, and fire and casualty companies 5Y2 times as much. Moreover, there are twelve life companies, each of whose assets exceed $1 billion, and there are some sixteen commercial banks of this size. The largest college endowment is only about $200 million, and there are only three others whose funds exceed $100 million. Thus the college investment problem is minute compared with that of our giant neighboring institutions. The rate of growth. of college endowments is much less rapid than the growth of banks and insurance companies. In the ten years ended in 1946 college endowments rose about one-third in amount, whereas commercial bank assets nearly tripled, life company assets doubled, mutual savings bank assets rose 60 per cent, and fire and casualty insurance company assets gained nearly 80 per cent. The $3.5 billion annual increase in assets of the life companies is twice as great in dollars as the aggregate of all investments now held by colleges. Therefore, there is not as much heat on the managers of college funds to find an outlet for new money as there is for insurance companies and banks, and, not having to rely on the supply of new investment media, colleges have been more free -in policy decisions. The college problem is rather one on how best to invest existing funds; the relatively small accretions from year to year are not much cause for concern.