Baylor University has traded its way to the top of the university endowment performance rankings.
Many universities allocate their money among different assets and adjust periodically. Baylor, led by a former trader, seizes on market moves frequently to boost or cut exposure to its managers.
“The only thing I’m doing is what the market tells me to do: If the market goes up, we take some money back. If the market goes down, we give it money,” said investment chief David Morehead. “It is finance 101.”
Morehead regularly touts Baylor’s performance compared with other endowments to its outside fund managers. He takes particular pride in beating the Ivies, which Baylor has largely done over the past five years despite those endowments’ larger staffs. Besides Morehead, Baylor has four investment staffers, all women.
The endowment gained 6.4% for the fiscal year ended June 30, beating all the Ivy League endowments. Over the past five years, its 10.9% annualized return outpaced that of all the Ivies except for Brown University, which notched a 13.3% average annual gain. Baylor ranks in the top 5% of all U.S. endowments for the period, according to Wilshire Trust Universe Comparison Service.