It looks as if the some of the top university endowments are cutting back their U.S. Treasury exposure in a big way — in some instances down to zero. At one time, U.S. Treasuries were the core holdings in most of the university endowments.
According to CNBC-Financial Times article:
Many university endowments have scaled back their holdings of Treasury securities from as much as 30 per cent in 2008-09 to zero in some cases, say people familiar with their investment strategies.
The sell-off reflects a big change in the way fund managers view US government debt. The traditional attraction of Treasurys for US investors was that they were certain to be repaid. But with interest rates at such low levels, investors worry that bond prices could fall dramatically.
“Treasurys were a core holding,” said one university fund manager. “Now everyone is holding less than 5 percent.”
The article goes on to say that Princeton’s endowment converted its entire U.S. Treasury holdings to cash while Duke’s $5.5 billion endowment shifted out of its U.S. Treasuries and into high yielding stocks and emerging market securities. Futhermore, Cornell’s endowment reduced its treasury securities to only 3%.
If the smartest money is getting out of U.S. Treasuries, how long before the rest of the world follows suit?
(photo attached to post: source Bloomberg)