We examine the link between endowment investment performance and the expertise of university board members. Harnessing detailed information on 11,019 members for 579 universities, we find that expertise in alternatives and larger professional networks are associated with higher allocations to alternatives and better investment results. Expertise and networks appear particularly important in private equity and venture capital, which are difficult to analyze and manage. The improved investment performance arises because endowments capture higher returns that can accompany alternative assets, select or have access to high performing managers, and minimize fees by accessing funds directly rather than through funds of funds.
Because identification of a causal effect of expertise and networks on allocations and performances is challenging, we conduct a novel survey of endowment managers and boards (representing collectively over 60% of endowment assets), and confirm that board expertise is central in facilitating alternative asset investments.