The investment portfolios for the endowments of Stanford University and Princeton University returned 5.6% each in 2020, raising their asset values to $30.3 billion and $26.6 billion, respectively.
For Stanford, the investment return led to a $1.6 billion net investment gain for the merged pool for the fiscal year ending June 30, easily outperforming the median college and university endowment return of 1.6% gross of fees, according to Cambridge Associates.
“In a volatile year, disciplined adherence to policy asset class targets aided performance and helped the portfolio recover from pandemic-related losses,” Robert Wallace, CEO of Stanford Management Company, said in a statement.
Stanford reported five- and 10-year annualized returns of 7.1% and 9.3%, respectively, outperforming the median endowment’s returns of 5% and 7.4%, respectively, over the same time periods. Stanford said that puts the school in the top 10% of its peer universe.
Spending from the endowment to support university operations in fiscal year 2019-20 was $1.36 billion, or 4.9% of the endowment’s value at the beginning of the fiscal year. The funds support the university’s core research and teaching mission, including financial aid for undergraduate and graduate students.
In June, Stanford’s Board of Trustees approved a conservative budget for fiscal year 2020-21 in anticipation of sharply lower revenues and investment returns due to the COVID-19 pandemic.
“The better-than-expected performance of the merged pool and the endowment is welcome news and will help offset a worse-than-expected revenue shortfall caused by our inability to bring back two undergraduate classes in the fall quarter,” Randy Livingston, Stanford’s chief financial officer, said in a statement. “We believe the conservative financial stance we have taken will serve us well as we continue to deal with the financial challenges related to the pandemic.”
The asset allocation for Stanford’s investment portfolio is 30% in private equity, 20% in absolute return, 20% in international equity, 8% in real estate, 8% in fixed income and cash, 7% in domestic equity, and 7% in natural resources.
Meanwhile, Princeton reported that average annual return on the university’s endowment for the past decade is 10.6%, which it said places the school among the top 1% of 433 institutions listed by the Wilshire Trust Universe Comparison Service.
“Princeton has been fortunate to face the many financial challenges created by the COVID-19 pandemic from a strong budgetary position, thanks in part to an endowment that is the result of generations of generosity from alumni and friends, as well as effective stewardship and investment by the trustees and PRINCO [Princeton University Investment Co.],” Provost Deborah Prentice said.
Brown leads the Ivy League schools that have reported fiscal 2020 returns with 12.1%, followed by Dartmouth’s 7.6%, Harvard’s 7.3%, and Yale’s 6.8%. The investment portfolios for the endowments of the University of Pennsylvania and Cornell University returned 3.4% and 1.9%, respectively, putting them at the bottom of the rankings.
The asset allocation for Princeton’s investment portfolio is 30% in private equity, 24% in hedge funds, 18% in real assets, 13% in developed markets, 9% in emerging markets, and 6% in fixed income and cash.
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Tags: Cambridge Associates, Endowment, Ivy League, Princeton, Princeton University Investment Co, PRINCO, Stanford, Stanford Management Company, Wilshire Trust Universe Comparison Service