The University of Texas' endowment has grown to $42.3 billion — and it can thank oil and natural gas royalties from the more than 2 million acres of land it owns in West Texas for the boost.
Harvard University's endowment, currently valued at a jaw-dropping $50.9 billion, has been the largest among academic institutions for more than 35 years. But the University of Texas is nipping at its heels.
"It's about three times the size of Rhode Island," says Ray Perryman, an economic consultant based in Waco, Texas."It's a very big expanse of land." That income was a ballast during a recent difficult period, when the stock market sank by more than 10%. According to the consulting firm Cambridge Associates, in fiscal year 2022, academic endowments had the lowest median return since fiscal year 2009. In recent years, endowments have been investing heavily in riskier assets, including private equity and venture capital funds, hoping to maximize their returns.
Yes, the University of Texas is invested in stocks and bonds and more complicated financial instruments, like its rivals. But those schools have wound down their investments in natural resources, traditionally seen as an inflation hedge.
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