Beating Goliath

A small college’s endowment manager outdoes Harvard with a simple weapon: Index funds.

- Janet Lorin

From his home office in Charlotte, one of the most successful investors in higher education plies his trade in blissful obscurity. Bill Abt employs no stable of hotshot bond traders. He doesn’t dabble in the fanciest Silicon Valley venture capital funds, hedge funds, or the latest computer-driven brainchildren of Ivy League physicists and mathematicians.

Yet Abt, on behalf of Carthage College, in Kenosha, Wis., has returns that beat Harvard ’s $37 billion endowment and most others. In the 10 years through the most recent college fiscal year, ended on June 30, 2017, the former beer company executive racked up a 6.2 percent average annual return, according to the school. That performance is better than 90 percent of his peers, based on data from the National Association of College and University Business Officers. Harvard’s endowment, the nation’s largest, averaged just 4.4 percent a year in the same period, in part because of heavy losses on investments in timber and farmland.

At Carthage, Abt’s approach was more pedestrian: mostly low-cost, market-tracking index funds from Vanguard Group Inc., the same funds used by legions of do-it-yourself individual investors. Why isn’t reliance on indexing more common among those who oversee the nation’s half a trillion dollars in college endowments? “Maybe it’s too simple,” Abt says.