By Debra E. Blum

College investment officers are worried that their institutions’ tight finances put them at risk for a credit-ratings downgrade, a new survey says. The officials’ biggest concern: A lack of diversification in their investment portfolios.

The survey, conducted by SEI, an asset-management company, in Oaks, Pa., included 57 executives overseeing college or university endowments, with assets ranging in size from $25-million to more than $1-billion.

Credit ratings determine how much interest organizations must pay when they borrow money or issue bonds. (Those with a higher rating pay less.) They are also an indicator of an organization’s financial health.

Not all higher-education institutions have a credit rating. Among the institutions represented in the poll, nearly three-quarters do have such ratings and more than half had taken on debt in the past 12 months.

While none of the institutions in the survey had experienced a credit downgrade in the last 12 months, almost all of the officials (97 percent) said their institution’s financial state put them at risk for such a demotion.

Among the problem spots indicated by the respondents, nearly one-third said a drop in income from fund raising was a concern.

But the greatest concerns focused on the institutions’ investment portfolios.

Eight-four percent of the respondents said credit agencies would look unfavorably at a lack of diversification, and 65 percent said that a lack of liquidity could lead to a credit downgrade.

Two-thirds of the participants did not feel that poor investment performance would result in a downgrade.

Carolyn McLaurin, an SEI senior vice president, says the survey results demonstrate that many colleges and universities are already aware of the importance of evaluating the diversity and liquidity in their investment portfolios.

That’s good news, she says, because in the economy’s weakened state, higher-education institutions ought to make sure they can meet their operating budgets.

“Higher-education institutions have been among the front runners in adopting investment strategies that tend to the illiquid side of the spectrum,” Ms. McLaurin says. “That kind of diversification is still important, but there needs to be a new stress test, one that accounts for the worst-case scenario of cash-flow needs.”

A complete summary of the poll is available by sending an e-mail message to seiresearch@seic.com.