What's going on?

Years of working hard, playing hard, and practicing esoteric marching band routines have paid off for US colleges� class of 2020: they�ve graduated with the highest mark in bond sales since 2004.

What does this mean?

US colleges have sold $36 billion worth of debt to investors so far this year. While universities around the world have faced pandemic-related uncertainty, even those without students physically returning to campus seem in little hurry to lower their hefty tuition fees. That income stability might be what�s attracted investors to universities� bonds in their droves � along with the top colleges� reassuring credit ratings. Harvard bonds due to be repaid in 2050, for instance, are deemed similarly safe to the US government�s � but they also offer investors a higher yield (tweet this)…

Why should I care?

For markets: Good Yield Hunting.

Investor demand for super-secure government and big company bonds has pushed their prices to record highs and their yields � which move inversely � to record lows. That�s spurring some bond investors to take greater risks in the hopes of making more profit. But for the likes of Samsung Life Insurance Company � South Korea�s biggest life insurer � the rationale for buying into US college debt is more straightforward: Korea�s aging population necessitates more payouts and therefore reliable long-term investment returns to fund them.

Zooming in: Nu Alpha Psi.

For years, university endowment funds � the pools of money that help keep them running � have themselves invested in so-called �alternative� assets deemed too risky for ordinary investors: private equity, for instance. And while that worked well for a while, recent analysis suggests many such funds are now underperforming simple stock and bond portfolios � illustrating that with greater potential reward comes greater risk too.