The Ivory Trade
Jan 18th, 2007 | Filed under: Hedge Fund Industry Trends
As the new issue of The Economist points out, the efficient market hypothesis was developed at a US university (The University of Chicago). But in an ironic twist, US university endowments seem to be disproving the whole idea of market efficiency with continuously stellar investment returns for their endowments. Was the EMH a scam perpetrated by the colleges themselves to juice returns, get rich and pay for better and better basketball teams? Or are the universities just a lot smarter than academics figured when they cooked up the efficient market hypothesis back in the sixties?
Either way, two trends stand out loud and clear: one, large US university endowments are blowing away the S&P on a one year and ten year basis according to data collected by The Economist; and two, realizing this, the investment heads of these endowments are leaving in droves to set up hedge funds.
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