Median return for endowments of $1 billion or more = 36% (FY 2021)
WashUStL 65%
Bowdoin College 57.4%
Vanderbilt 57.1%
Duke 56%
MIT 55.5%
Brown 51.5%
Williams College 49.9%
Univ. of Virginia 49.5%
Princeton 46.9%
Dartmouth 46.5%
Northwestern 42.2%
Cornell 41.9%
UPenn 41.1%
Yale 40.2%
Stanford 40.1%
Chicago 37.6% median ($1 billion plus) 36%
Colgate 35.8%
Univ. of Texas 35%
Harvard 33.6%
UCal-Berkeley 34%
Univ. of Illinois 34%
Columbia 32%
Please add to this list and/or post any endowment news related to investment returns or size.
The big winner in my opinion is Vanderbilt. They bet big a few years ago (when the endownment was not as healthy) in undertaking a complete rebuild of the residential college system, and it looks like it is going to work out very well.
Endowments tend to invest heavily in illiquid assets, which probably generated the greatest returns. However, their valuations are always tricky and likely more volatile.
These are staggering returns, even those at the bottom of this list! I wonder what risks (bets) WashU took to achieve 65% - cause for celebration but perhaps also concern.
A lot are very opaque about their investments, however from those that are more transparent, they have very miniscule to 0% left tail, convex, precious metal or commodity strategies. Zero to single digits of all those combined. Almost all have sold down fixed income to a 5-15% holding.
Their big bets are private equity (huge), venture cap, listed equities, some credit and long-short hedge funds and real estate. So, they are going to continue to do great if the everything bubble continues to expand and terrible if/when it collapses and/or we are set for inflationary times. They own everything you donât want to own in a deflationary collapse e.g. 2008, first quarter of 2020, or an inflationary period i.e. 1966-1982.
They are so skewed towards bullishness with no downside protection, it will be interesting to see how they do by FY 2023.
I have been agnostic on long-term inflation, but it should at least be a consideration.
From what I have seen, zero to tiny exposure to cryptocurrencies, though a friend told me last week that they have asked some of their young ones to explore the possibility of crypto investments.
If you ask someone who owns cryptos the mantra is they are an inflation hedge as well as a great hedge against stock market downfalls. However, the empirical evidence is, Cryptos fell even more than the S&P during the Covid collapse in Feb - March 2020, so I highly doubt they will act as a hedge in a deflationary market collapse. Meanwhile gold fell only about 5% during that same time period. Crypto price action is just a very volatile version of the other bubble asset classes to me, but we havenât seen how cryptos do during an inflationary period. We know gold went up 3x in REAL terms during the 1966-1982 inflationary period, whereas stocks, residential real estate and corporate bonds had a negative real return over the 1966-1982 (17 year!) inflationary period.
Very surprised to learn that stocks & residential real estate had a negative real return during a 17 year period of inflation. When you refer to âresidential real estateâ, does that include unimproved land zoned for residential use as opposed to housing units ?
FWIW I think that silver is a reasonable investment now for those concerned with the prospect of inflation.
Silver was up over 175% in real terms during the same time period. Both gold and silver actually peaked much higher, but gave some back by the end of 1982. Not surprisingly, treasury bonds provided no safety net, as they had a negative real return too. I donât have a breakdown for raw land.
Yes, stocks and residential real estate is a Wall Street fallacy regarding inflation. Just like anything else, if it is repeated often enough it becomes âcommon knowledgeâ and it seems very few of us actually go back and verify. However, empirically, it is simply false. The S&P 500 Index was actually down approximately 50% in Real terms from Jan 1, 1966 through December 31, 1982. Dividends (including the unfair assumption that all dividends are untaxed) brought the total return up to negative single digits. Mathematically, donât expect todayâs paltry 1.2% dividend yield to provide a big total return lift if there is an inflationary future though.
Residential real estate may do well for many people during inflation because the inflation effectively shrinks the debt that they took to buy the residential real estate.
There are a couple notable data omissions (Cornell and UChicago) but overall fiscal year 2021 proved to be a record setting year for college endowments with many endowments gaining 30% or better. My alma mater Williams had a 46.8% return while arch rival Amherst did slightly better with a 47.2% return. Returns like these are clearly unsustainable, but with some of the numbers so staggering, what are some of these wealthier institutions going to do with their outsized endowments?
College endowment Fiscal Year 2022 (June year-end) data will start to trickle in soon. Due to the opaqueness, short-term accounting âflexibilityâ, and illiquidity of private equity investments, the reported college endowment 2022 data will be better than economic reality. Private equity firms generally did not write-down their portfolio returns by June. Pensions and endowments are lying to themselves if they think private equity ended the June year-end up while public equities were down substantially. Private equityâs true mark-to-market negative returns havenât been reflected in the 2022 data. They will try to âbridgeâ the gap by reporting smaller declines and then hope that the next bull market starts soon enough that realistic mark-to-market pricing catches up to their current aggressive accounting practices. Kind of like a luxury home listed for $10m that not a single potential buyer will purchase for $7m, but the home is still marked on the ownerâs books for $10m in value in the hopes prices will rise back up to $10m.
University of Virginiaâs investment manager UVIMCO reported below. UVIMCO public equity -22.6%, -22.9% long/short equity, but private equity +3.7%. HmmâŠ