BOSTON - Endowment funds of major colleges and universities lost 19 percent for the year ended June 2009, outpacing the 28 percent drop in the Standard & Poor's 500, according to a survey released on Thursday.

Despite some high-profile hedge fund disasters, alternative investments remained quite popular with the 435 educational institutions.

The group had 51 percent of assets in alternatives compared to just 19 percent in traditional U.S. stocks, according to the survey conducted jointly by the National Association of College and University Business Officers and the Commonfund Institute.

The heavy emphasis on alternatives like hedge funds, private equity and venture capital helped the group outperform the market, William Jarvis, managing director at the Commonfund Institute, said. In a real sense, they did hedge, Jarvis said.

Still, Jarvis said the allocation to alternatives was inflated by endowments selling off more liquid investments like stocks and bonds in the midst of the wake of last year's credit crunch. The percentage invested in alternatives was 46 percent on June 30, 2008.

The overall results confirm that the very largest endowments, like those at Harvard University and Yale University, lagged their peer group. Harvard has said its endowment declined 27.3 percent in its fiscal year ended June 30, 2009, while Yale said its fund lost 24.6 percent. (Reporting by Aaron Pressman, editing by Leslie Gevirtz)

Investment