Publications

- July 1, 2021: Vol. 8, Number 7

The shrinking student body: Once hot student housing confronts demographic trends

by Mike Consol

Investors committed to student housing appear to have some stark challenges ahead. New data provides a final tally of the enrollment decline higher education experienced during the spring term of 2021. Total college enrollment fell 3.5 percent from a year earlier, a shortfall of 603,000 students. That was compounded by news the U.S. birth rate fell 4 percent in 2020, marking the lowest number of births since 1979 and the sixth consecutive year of declining birth rates. Once that “demographic cliff” hits, the new data show, it won’t let up for more than a decade; babies born in 2020 won’t reach traditional college-going age until 2038. (National Center for Health Statistics, National Student Clearinghouse Research Center)

HEAD OF THE CLASS

The aggregate value of the endowments of the richest 20 U.S. colleges has risen above $311 billion, giving them a collective value greater than the GDP of Chile, Finland or New Zealand. The joke about Harvard — which sports the country’s biggest endowment — goes like this: “Harvard is a hedge fund with an educational arm.” Meanwhile, Harvard’s acceptance rate, which was 85 percent in 1940, dropped to 20 percent in 1970, and this year was a mere 3.4 percent. (International Monetary Fund, Chronicle of Higher Education)

THEMATIC LOSES

During the past 10 years, 30 percent of thematic funds closed due to poor performance, with 34 percent underperforming the market and only 36 percent outperforming. This happened in the midst of a 10-year bull market, so why the underperformance? Thematic investing by its nature is prone to investors chasing hot themes that go in and out of popularity. They also have high fees that eat into the returns, while investors can invest in an S&P 500 index fund for almost nothing. (Bob Pisani, CNBC, Morningstar)

MIDAS TOUCH

Of the world’s 142 listed firms worth more than $100 billion, 43 were created in the past half-century; 27 in the United States, 10 in China, and only one in Europe (SAP, the German software giant). The United States and, increasingly, China are economically ascendant, accounting for 76 of the world’s 100 most valuable firms. Europe’s tally has fallen from 41 in 2000 to 15 today. What’s more, half of Europe’s 10 richest billionaires inherited fortunes spawned long ago; in United States nine of the top 10 are wealthy solely because of companies they founded. (The Economist)

NO HEDGING AGAINST THIS GROWTH

Hedge fund assets passed the $4 trillion mark earlier this year, almost doubling their $2.3 trillion assets under management in 2012. A 2020 survey of hedge fund managers identified that a shift toward ESG-friendly investment policies is afoot. While 39 percent of funds have an active environmental, social and governance policy, another 16 percent are considering or implementing ESG plans. One example is Ray Dalio’s Bridgewater Associates, the world’s largest hedge fund, which launched a new sustainable investing venture in April. Venture capital investments have also been roaring, hitting a new global record of nearly $130 billion during the first quarter. (Axios, KPMG, PitchBook, Preqin)

GAMES TECH COMPANIES PLAY

Video games on phones and PCs are by far the world’s fastest-growing category of media and entertainment. Streaming video is also enjoying explosive growth. Technology giants are eyeing an even bigger target — online gaming, which generated $21 billion globally in 2020. Netflix is reportedly hiring a gaming chief as it expands more deeply into the space, particularly on mobile devices. Amazon, Apple, Google and Microsoft have all increased their investments in cloud gaming, with an eye toward making more money from videogame subscriptions. (Axios, Sara Fischer, PwC, Statista)

ANIMAL PLANET

Half of all habitable land on Earth is used for agriculture, and most of that is used for animal agriculture. (Fareed Zakaria, The Global Public Square, Ezra Klein) 

Mike Consol (m.consol@irei.com) is editor of Real Assets Adviser. Follow him on Twitter @mikeconsol to read his latest postings.

Forgot your username or password?

We use cookies and other tracking technologies to personalize your user experience on our site and perform site analytics. By clicking on “I accept”, you consent to our Privacy Policy.