There are plenty of exotic investments that have gotten colleges into trouble of late.

As it turns out, the one that could end up costing the University of Pittsburgh most or all of the $65 million it had entrusted from its endowment was not one of those alternative investments.

The university has said little publicly about its decision to go with Westridge Capital Management or the allegations of fraud that now surround how the firm's managers may have spent the money.

But experts say "enhanced indexing," the sort of strategy used by Westridge, is by itself a relatively traditional form of investing, even though it has some nontraditional elements. The former lead consultant for Wilshire Associates, the investment advisory firm that introduced Pitt to Westridge, described it as a form of investing in domestic stocks.

A Carnegie Mellon University trustee offered a similarly benign description of his school's $49 million investment with Westridge, funds that also are in jeopardy. Carnegie Mellon has said Wilshire recommended Westridge to it.

"There are certainly types of investments that have high risk. This was not that kind of investment," said James C. Stalder, Carnegie Mellon trustee and board investment committee member.

Based on those views, the hard questions Pitt and Carnegie Mellon face could have less to do with the investment choice itself, and more to do with whether the schools or their representatives should have known earlier that their money was not being used the way it was intended.

On Feb. 25, federal agents arrested two East Coast money managers with Westridge, saying they misappropriated more than $500 million from pension funds and university foundations across the nation, including Pitt and Carnegie Mellon, which began investing with Westridge in 2002 and 2008 respectively.

Paul Greenwood and Stephen Walsh are accused of using the money to cover losses and to spend lavishly on items from collectible teddy bears to horses to a $3 million Florida home for Mr. Walsh's ex-wife.

"If there's a fraud, no matter what you're in, you're probably going to lose a lot of money," said Robert Korajczyk, a professor of finance with the Kellogg School of Management at Northwestern University and director of its Zell Center for Risk Research.

Enhanced indexing "is much closer to traditional in the sense that you're really trying to mimic and beat, slightly, a standard stock market index," he said. "To the extent they are using futures you might say it's like an alternative, but in reality, it's a pretty traditional product."

Even so, certain fund managers who use such a strategy may be subject to less regulation than mutual funds, which makes it "all the more important to be sure you're working with a manager that is trustworthy and won't take you to the cleaners," Dr. Korajczyk said.

"There's much less risk of that happening" to an investor who has in place a custodian independent of the manager who can track the investment, he said. Enhanced indexing, he added, is far easier to monitor than some other forms of investing provided the right oversight apparatus is in place.

Pitt and Carnegie Mellon refused last week to discuss what sort of custodian arrangements may have been in place for the Westridge accounts.

"We've made our comments that we're prepared to make," Arthur Ramicone, Pitt vice chancellor for budget and controller, said Wednesday.

Mr. Stalder said the Westridge situation is "terrible news" that will add to financial challenges already facing his school amid a recession, but he said Carnegie Mellon invests carefully.

In a prepared statement last week, Pitt Chancellor Mark Nordenberg said his school is prudent as well. Without elaborating, he said the Westridge fund was subject to federal regulation and to regular audits from an accounting firm he did not name.

David T. Jack, managing director of Wilshire's Pittsburgh office from 1996 to 2006 and former lead consultant for Pitt's stock and bond portfolio, said the firm properly vetted Westridge and found no reason to steer clear.

J. David Barnes, an emeritus trustee at Pitt and former chairman and CEO of Mellon Bank, said it might be a good idea for Pitt to form an ad hoc committee to analyze Pitt's involvement with Westridge. Mr. Barnes attends investment committee meetings as an emeritus board member.

"It's a mess. But at this point in time, one can't say more than that until you have the facts, and at this point in time we're struggling to get facts," he said.

While potential Westridge losses faced by Pitt and Carnegie Mellon are from traditional investments, colleges around the nation -- including Pitt and CMU -- which are intent on growing their wealth this decade became more willing to embrace alternative investments that had varying degrees of risk -- from private equity partnerships to illiquid hedge funds to commodities like timberland.

Nearly a decade ago, two-thirds of college endowment wealth was invested in more traditional assets like domestic and foreign equities, said Ken Redd, director of research and policy analysis with the Washington, D.C.-based National Association of College and University Business Officers. Now, those equities account for only half of the $412 billion in endowment assets held by colleges.

"The biggest shift has been into hedge funds, which went from about 3 percent of endowment assets to about 13 percent in 2008," he said.

Mr. Redd, who oversees NACUBO's annual endowment survey, said alternatives simply outperformed more traditional assets up until 2008.

Campuses that relied on them earlier this decade saw some of the biggest gains in a boom cycle in which double-digit endowment growth in one single year was common.

Harvard University, for one, saw its endowment grow in market value from about $17.9 billion early this decade to more than $36.6 billion last year, a sum larger than that of any other university. Yale University, which has the second biggest endowment, saw its wealth grow from $10.7 billion to $22.9 billion as of last year.

Harvard is operating under the assumption that its endowment will lose 30 percent of its value by the end of this fiscal year, said spokesman John Longbrake. Yale reported this fall that its endowment had lost about a quarter of its value.

Prolonged endowment drops spell trouble, because campuses draw down from their endowments to support endeavors from scholarships and endowed professorships to library purchases and operating expenses.

Pitt and Carnegie Mellon diversified their investing toward alternatives, too.

In March 2001, the people closest to the purse strings at Pitt gathered in a first-floor office inside the Cathedral of Learning to take a hard look at the institution's wealth.

Just eight months before, Pitt had celebrated a milestone, announcing it had become one of only a few dozen universities in the nation to have an endowment worth more than $1 billion.

But Pitt wanted to do better.

Having reviewed a report showing that schools with investments more heavily weighted to nontraditional assets received better returns, the Pitt trustees investment committee voted to diversify its asset allocation, minutes from its March 13, 2001, meeting show.

Minutes from that and subsequent meetings through 2008 indicate the share of Pitt's investment pool targeted to stocks declined from 50 percent to 42 percent, and the share targeted to bonds and other fixed income securities declined from 25 percent to 10 percent.

The share described by Pitt as targeted to alternatives grew from 20 percent to 48 percent, a mix that as of June 2008 included 18 percent in marketable alternatives and 15 percent each in non-marketable alternatives and real assets.

Pitt, the region's largest public university, continued to enjoy financial gains during those years. Though the school would not provide its one-year rates of investment return for the period, records show its endowment market value by 2007 had ballooned to $2.2 billion from gifts and investing. And it approached $2.4 billion by last summer.

But by December, things suddenly changed. Pitt Chancellor Mark Nordenberg reported that the university's endowment had lost 22 percent of its value, a percentage that suggests a decline of just over half a billion dollars. He did not indicate which kinds of investments were hardest hit.

Carnegie Mellon's endowment grew this decade, though not as fast as Pitt's. Carnegie Mellon's endowment had a market value of roughly $1.1 billion as of last year, up from $756.9 million in 2001.

The school's annual report indicates the share of alternative investments at Carnegie Mellon by last year stood at 32 percent, up from 24 percent in 2007.

Carnegie Mellon President Jared Cohon informed the campus last month that the school expected its endowment investments to be down 30 percent by the end of the fiscal year. He did not indicate what investments were hardest hit.

Jay Sukits, a faculty representative from 2003 to 2007 on Pitt's investment committee, said he believes the school manages its endowment well and that all the due diligence in the world might not have made a difference.

"There are people who are very good at committing fraud. Unfortunately, that's the truth," he said.

Mr. Sukits was not always so confident of Pitt's investing acumen. Minutes from a faculty assembly meeting in March 2005 indicate he told assembly members "there are some serious flaws in the way the endowment is managed now."

Mr. Sukits now says those remarks were specific to a tendency then by Pitt to allow the hiring of what he viewed as an unnecessary number of managers to help mimic an index fund related to its domestic stock portfolio.

Regarding the Westridge investment, Mr. Barnes said trustees do not yet know if there were red flags about Westridge that should have been noticed. If there's a way to prevent such investments, he said, trustees want to know about it.

"Big universities have these problems. Big companies have these problems," he said. "It's just a hell of an exasperation, a hell of an embarrassment."