The University of Cambridge has been named the richest university in Britain following recent successes in investment management and fundraising.

According to recently revealed figures, the University’s current endowments total £4bn after the completion of a billion-pound drive for new donations which begun in 2005.

Much of the recent success has been accomplished due to good timing with the Cambridge University Endowment Fund (CUEF), which was formed in 2007. This allowed the University to avoid investing in the illiquid assets which have damaged the finances of many American universities, whilst enabling to benefit from crisis bargains arising from the recession.

Another successful strategy was the adoption of a popular endowment investment approach widely known as the "Yale strategy", involving investments in "real assets", such as land and natural resources, which are immune to inflation.

Broadly speaking, the University's financial assets are the sum of the assets of the University itself – a pool of £1bn managed centrally by the CUEF – as well as those of the 31 individual Colleges. At present, only two Colleges invest in the CUEF, although more are expected to follow in the future.

The CUEF’s strong performance culminated in a reported return of 19 per cent from investments over the period of June 2009 – 2010. This figure surpasses Harvard University’s return rate over the year, which suffered significant losses from investments in private equity.

Nevertheless, Cambridge is still not as rich as its American rival, which has an endowment worth $27.4bn (£17.5bn). In fact, there are five other universities in the United States that are richer than Cambridge, making it 7th on a global table, with the University of Oxford coming in at 15th.

In Britain however, the top two richest educational institutions – Cambridge (£4bn) and Oxford (£3bn, reported last year) – are leagues ahead of others, with the third richest being the University of Edinburgh, which has assets of £165 million.

While the recent financial success of the University is indeed a cause to celebrate, CUSU president Rahul Mansigani suggests that, “we need this to translate into genuine improvement of student life and experience at Cambridge, for example through increased funding for the sports centre and student facilities as well as ensuring that the University's student support services are significantly improved.”

Mansigani warns that “Cambridge still stands to suffer damaging cuts in government funding and there is a real threat to the quality of our education. It is vital that any such threat is opposed effectively by students.”