During fiscal year 2025, the University of Michigan Investment office A. was born Return rate 15.5% On its discontinuation, raising the portfolio by $2 billion to a total market capitalization of $21.2 billion.
International Markov processes – Financial technology company – published research a report Using data from MPI Transparency Lab. In the report, which tracks universities that achieved the lowest return on investment rate of about 11%, the university showed the highest return among the best American universities. The university was followed by the Massachusetts Institute of Technology with a return rate of 14.8%, and Stanford University with a return rate of 14.3%.
MPI linked Michigan’s success to increased investments in artificial intelligence and cryptocurrencies. In 2018, Univ Pledged $3 million to Andreessen Horowitz – Venture Capital Company – for Cryptocurrency Fund and It increased her commitment in 2019. At the same time, the university has expanded its stake in AI stocks: in 2022, the university will announced its limited partnership with Altman Capital In an investment fund that focuses on technology companies that rely on artificial intelligence. Reports from 2023 and 2024 Show that the university has invested directly in OpenAI or OpenAI investment structures. Both artificial intelligence and cryptocurrencies have it appeared As high-growth, high-volatility sectors whose rapid rise has helped increase endowment returns.
In an interview with the Michigan Daily, Junior Business Council member Joe Thummel said Michigan Interactive InvestmentsHe said he believes the potential value the endowment could get from investing in AI could be very large.
“All endowments that invested in technology will achieve better results on average,” Thummel said. “Ultimately, AI may be the next industrial revolution. And I don’t think that’s a crazy statement. If you look at the total addressable market of the entire service economy, people are trying to claim that this is where AI can go now. The total[addressable market]that AI can touch is trillions and trillions of dollars. And people are willing to invest because the amount of economic value that will come from AI is clearly enormous.”
Thummel said there is a risk when an endowment decides to invest in AI companies, but betting on the potential for AI investments to outperform informal, industry-oriented companies is worth it.
“They should definitely take some risky assets,” Thummel said. “Even if these companies are fairly expensive right now, the likelihood of AI getting to where it needs to be sooner rather than later is still positive. And then these companies will realize even greater value. If I take the risk by buying Delta Air Lines, I know the cash flows will grow with the demand for this, but if I hire an AI agent who can be my executive assistant, for example, the value is huge. So you’re taking a risk with AI, but the upside is 200% — versus buying Delta, it looks like this: 20-50%.”
In an email to the Daily, University spokesman Kay Jarvis was cited Endowment Report 2024 To provide greater context on how heavily the university is investing in AI.
The report notes that a significant portion of the university’s endowment falls into the “alternative asset” category. Investments in long or short stocks, distressed debt, venture capital, private equity, real estate, natural resources, and alternative energy strategies fall into this category. the university investment The OpenAI initiative at OpenAI is billed as an “alternative energy strategy,” where the university’s investment office takes direct ownership in companies to actively enhance their value. MPI estimates that about 2.9% of alternative assets relate to investments in cryptocurrencies, and 2.8% relate to direct investment in AI-related companies.
University endowments are typically long-term investors. They allocate capital to stocks, bonds, and more financial contracts over periods of five to ten years. In an interview with The Daily, Aaron Kodomoro, chief business officer, vice president of investments at Michigan Interactive Investments and president of… Corn Fund and Blue EndowmentHe explained the long-term mindset behind investing in artificial intelligence.
“To be a long-term investor, investing for five to 10 years, what you look for are high-quality AI companies that work through cycles,” Kodomoro said. “The way to think about this is that it’s very important to get away from the noise and understand which management teams are doing well and put capital behind that. Fundamentally good companies have structural tailwinds, cyclical companies will decline within a year.”
Thummel said the university is not following the trend that companies and other institutions have noticed in shifting toward artificial intelligence, and instead believes the university is looking to the future.
“I wouldn’t say they’re not chasing trends,” Thummel said. “They know where the value is. Our managing director for our endowment is incredible. He’s very advanced in technology. And as an endowment manager as well, you’re managing really important money. That’s people’s tuition, all the donations. You’re not going to take a lot of risk, and I think our endowment understands that. And I think they’re doing it in a safe way.”
Thummel said students should think about AI-related investments in a positive light and with short- and long-term value to the university.
“In the short term, we have to act as if he will do everything,” Thummel said. “In the long term, it’s likely to happen. I mean, we’re literally replicating intelligence. So there’s nothing else that’s going to have an impact like this. An institution like (a university) should take positions in this AI business, because the value will start to be realized in the long term, and even if it (realizes) in the short term, it will still generate a return.”
Daily News contributor Nate Cook can be reached at [email protected].
