The University of Texas (UT) system's endowment passed Yale University's to become the second largest in the nation, according to an annual survey by Commonfund and the National Association of College and University Business Officers (NACUBO), Bloomberg reports.
At the end of their last academic year (June 30, 2014), the UT system's fund had grown 24% to $25.4 billion. That figure stands second only to Harvard University's $35.9 billion. Yale, which had held the second spot since 2002, saw its endowment jump 15% to 23.9 billion.
UT's gains were driven by royalty revenue from oil and natural gas reserves on the system's land.
In the last fiscal year (ending Aug. 31, 2014), UT's land value jumped 70% to $8 billion largely due to the booming value of oil and gas—which have since dropped 54% and 29% respectively.
On average, colleges saw a 15.5% return on investments at year end, largely thanks to the domestic stock market which produced an average 22.8% gain for endowments, according to Commonfund and NACUBO.
Meanwhile, international stocks increased 19.2%, investments like hedge funds earned an average 12.7% return, and venture capitals earned 23.3%. Additionally, Standard & Poor's 500 Index jumped about 20%.
Although most schools' investments have recovered from the Great Recession, the average 10-year endowment return was still below target through 2014, and one school with a larger than $1 billion endowment lost money: Yeshiva University.
"There are still big challenges out there," says NACUBO President John Walda, adding, "We need to have good returns in the years to come to hit that target rate."
Unchanged were spending rates from endowments, which remained at 4.4% (McDonald/Streib, Bloomberg, 1/29).
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