JAPAN

Universities look to US for investment inspiration

Japan’s universities are looking to big US college endowments for some investment inspiration, raising the prospect of more Japanese money going into previously shunned areas, such as private equity, writes Eleanor Warnock for The Wall Street Journal.

Private universities are adding hedge funds and infrastructure projects to their portfolios, and state-sponsored universities are lobbying to get old limits on investing lifted. So far, the changes are affecting only a small slice of the roughly ¥10 trillion (US$83 billion) in funds held by Japanese colleges and universities, but they reflect a consensus that more-aggressive investing is needed to secure future financial stability.

Japanese universities come to the investing game with some big differences from the US peers they say they want to emulate. Tuition in Japan is far lower – often less than US$10,000 a year even at top private universities – and private donations are scant, making funds slow to accumulate. Even the biggest investors are tiny compared with Harvard University’s US$36 billion endowment. University finance directors in Japan say they need to squeeze every yen they can from their investments because of the nation’s declining population and near-zero rates on government bonds.
Full report on The Wall Street Journal site