College endowments received returns that nearly tripled their investments in oil and natural gas, a study released Wednesday said.
College endowments across the country invest only a sliver of their endowments in energy stocks, but these stocks have paid off handsomely, according to the study conducted by Sonecon and backed by the American Petroleum Institute.
The study traced the returns for 823 colleges and universities, which held $408 billion in oil and natural gas equities. Those investments represented 2.1 percent of the schools’ total endowment assets, but generated 5.7 percent of endowment gains between June 2010 and June 2011.
In that year, oil and gas stocks made returns of 52.8 percent, almost double the returns on all U.S. publicly trade stocks, foreign equities or real estate-based securities.
Higher education endowments have faced mounting pressure from students urging divestment from fossil fuel companies to address climate change concerns. They also have moved away from equities investments in recent years, preferring alternative investments, such as hedge funds and real estate investments.
The move has probably cost universities, at least recently, according to the report author Robert Shapiro, chairman of private consulting firm, Sonecon.
“University and colleges have probably made some misjudgments in moving out of equities and into alternative investments,” said Shapiro, who authored the report. “Our findings tell us that the highest consistently performing assets have been oil and natural gas stocks. To me, that says that it would have been wise to have invested more in those stocks.”