Universities Shed Timid Investor Role

Universities in Japan are trying their hand at a new kind of business…investment.

Japanese universities used to hold their assets in the form of cash, deposits and/or domestic bonds. Most still do.

However, now about one in seven of Japan's universities have a positive attitude towards alternative investment.

Some examples of universities that are expanding their investment portfolio.

Tohoku Fukushi University put up the entire 1 billion yen needed to construct a new train station near the campus to make it and easier commute for students, professors and workers and, to collect the revenues from the tickets.

The university expects to get about a 3% return on this investment. Okay, Harvard, stop laughing. Normally anything in the 2% range is good in Japan.

Chuo University purchased 1 billion yen worth of index-linked bonds with connected to trends in commodities markets.

Toyo University is thinking about investing in copper.

Waseda University invested 7.3 billion in real estate.

Realizing that universities are NOT investment experts, the VP in charge of finance at Keio University says, "It is necessary for universities to thoroughly discuss the risks and returns of investments with financial institutions and fully understand their nature before proceeding."

Well, yeah!

It is necessary for anyone who is thinking about investing, no?

American universities with huge endowments are enjoying great returns on their investments, 10% and higher…Japan is happy to get 3% or better. Maybe Japanese universities should look overseas.

What do you think?