Feel Sorry for Harvard and Yale?

The endowments of Harvard and Yale are expected to report declines of 25% to 30% for their fiscal years, which end today. Many a smaller endowment has done better, the WSJ reports, mainly because smaller endowments invest more in bonds and little or nothing in "alternative" investments.

Don't feel sorry for the Ivies. As of a year ago, Yale had achieved a 20-year average annual return of 15.9%. Say Yale's return for fiscal 2009 is -30%. That still gives the Elis an average return of 13.15% over 21 years. And that's one reason Yale's endowment is still so large.

Compare:

At a nice, conservative 6%, in 21 years $100 will grow to about $340.

At 13.15% , in 21 years $100 will grow to well over $1,300.