Dartmouth Leads Ivys, Leaving Harvard in Its Dust

The $3.49 billion fund has outpaced the mega-endowments, returning 5.8% in 2012.

(October 16, 2012) – It’s been a lackluster fiscal year for many major university endowments, allowing Dartmouth College to lead the Ivy League (so far) with returns of 5.8%. 

“We are pleased by the endowment’s performance, particularly given the modest global market returns and high volatility in fiscal year 2012 reflecting significant uncertainty and risk in the macro-economic environment,” said Pamela Peedin, Dartmouth’s chief investment officer, in a statement. 

Yale comes in second place with gains of 4.7%, while Cornell and Princeton have yet to release their results. Princeton’s president has already tempered expectations, however, announcing that returns will likely fall between 0% and 5%. Columbia University recently reported 2.3% gains on its $7.65 billion in endowment assets. 

The Massachusetts Institute of Technology Investment Management Company (MITCo) does not, of course, invest for one of the Ivys, but it’s 8% returns put the $10.3 billion fund in a league of its own among major endowments. 

Harvard, the world’s largest university endowment at $30.7 billion, did not put up much of a fight. Its portfolio lost 0.05% of its value in fiscal year 2012, battered by deep losses in emerging markets equities. The returns report noted that Harvard “carries relatively more exposure to both foreign and emerging markets than many of our peers”—including Dartmouth. While the Cambridge, Mass.-based endowment has roughly equal allocations to US, international developed, and emerging markets equities, according to its report, frontier stocks made up only 5.4% of Dartmouth’s portfolio at the close of fiscal year 2011. (The endowment has not yet released its full 2012 report.) 

Peedin credited Dartmouth’s best-in-class returns in part to the thriving domestic stock market, which held 16.6% of the endowments assets: “The portfolio benefited from the strong performance of our US equities strategies, as well as its allocation to private capital strategies, including private equity, venture capital, real estate, and natural resources, all of which performed well.” 

As of June 30, 2011, private equity comprised 15.9% of Dartmouth’s portfolio, and 8.6% went to venture capital. These substantial—and high-yielding—allocations in alternatives (46.2% total) and equities (30.2%) are possible because the investment team dedicates just 2% of total assets to fixed income. 

A spokesperson for Dartmouth, Justin Anderson, suggested to aiCIO that endowment success in fiscal year 2012 might not be an anomaly. “Of course, I can’t predict the future, but I can say we are extremely please with how our investment team did this year, and we’re confident with the direction they’re going in.” 

Endowments and foundations had the worst returns of any institutional investor class in the fiscal year through June, gaining an average of 0.37%, consulting firm Wilshire Associates said in an Aug. 6 report

 Last year, Harvard’s endowment fund returned 21.4%, and Dartmouth’s 18.4%.