Yale’s endowment, which is the envy of many institutional investors for often producing double-digit and outperforming its peers, reported a lackluster 5.7% investment return net of fees for the year ending June 30. The returns are among the lowest reported by a major university endowment forfiscal 2019. The endowment’s asset value increased to $30.3 billion from $29.4 billion last year .
Over the longer term, Yale’s endowment performed better, returning 11.1% and 11.4% annualized over the past 10 and 20 years respectively.
Over the past 10 years, domestic equities returned 15.5% for the portfolio, beating its benchmark by 0.9% annually. Foreign equities produced returns of 16%, easily surpassing the composite benchmark by 9.9% annually. Absolute return produced an annualized return of 6.4%, leveraged buyouts returned 16.1%, venture capital returned 20%. Real estate and natural resources contributed annual returns of 8% and 5.7% respectively over the past 10 years.
And over the past 20 years, domestic equities had annualized returns of 11.4%, exceeding benchmark returns by 5% annually. Foreign equities returned of 14.7%, which was 8.4% higher than the composite benchmark. Absolute return produced an annualized return of 8.8%, leveraged buyouts returned 12.6%, while venture capital returned a whopping 241.3% over the past 20 years. Real estate and natural resources posted annual returns of 9% and 14.7%, respectively.
The endowment’s asset allocation targets for 2020 are 23% absolute return, 21.5% venture capital, 16.5% leveraged, 13.75% foreign equity, 10% real estate, 7% bonds and cash, 5.5% “natural,” and 2.75% domestic equity.
Stanford, another endowment behemoth, performed a little better than Yale, returning 6.5% for the 12 months ending June 30. Bringing its total asset value to $27.7 billion as of Aug. 31, up from $26.5 billion at the same time last year.
Stanford Management Company, which manages the endowment’s investment portfolio, said the broad universe of US colleges and universities generated a median 4.9% return for the same period, citing preliminary data from Cambridge Associates.
Stanford’s portfolio generated a 7.4% and 10.2% annualized net return over the last five and 10 years respectively, compared with annualized median returns of 5.1% and 8.5% respectively for colleges and universities over the same time periods.
“Our results were bolstered by significant value added above benchmark results in our public equity portfolios, where we have worked to upgrade our capabilities over the last three years,” Robert Wallace, CEO of Stanford Management Company, said in a release. “Performance in illiquid asset classes, including private equity, was strong in absolute terms but trailed our expectations in relative terms.”
And Brown University’s endowment returned 12.4% for fiscal 2019, more than doubling its benchmark’s return of 5.8%, rasing the endowment’s total value to a record high $4.2 billion, according to the Brown Daily Herald.
The 12.4% return more than doubles the peer top quartile and peer median return rates of 5.9% and 4.9% respectively, and is so far the top-performing endowment among the other Ivy League universities that have announced their returns for the year.
The 10-year average historical asset allocation for Brown’s portfolio is 30% absolute return, 23% public equity 21% in private equity, 10% real assets, 7% fixed income, 5% cash, and 3% equity-like credit.