Yale University’s endowment reported an 11.3% investment return (net of fees) for the year ending June 30, boosting its total asset value to $27.2 billion from $25.4 billion at the same time last year.
The results fell short of the 12.9% return produced by the broad universe of college and university endowments as measured by consulting firm Cambridge Associates. However, the endowment easily outperformed last year’s returns of 3.4%.
The endowment returned 12.1% per year over the 20 years ending June 30. The Yale Corporation Investment Committee said this beats the broad market results for domestic stocks, which returned 7.5% annually, and domestic bonds, which returned 5.2%. During that same period, the endowment grew from $5.8 billion to $27.2 billion.
Over the past 20 years, the endowment’s domestic equities returned 12.2% annually, beating its benchmark by 4.7%, while foreign equities returned 14.1% a year, surpassing the composite benchmark by 7.8%. Absolute return, leveraged buyouts, and venture capital investments returned 8.9%, 12.6%, and 106.3%, respectively, while real estate and natural resources contributed annual returns of 10.3% and 15.2%, respectively.
Spending from the endowment is projected to be $1.3 billion for fiscal year 2018, representing approximately 34% of the university’s net revenues. Endowment distributions to the operating budget have increased at an annualized rate of 9.2% over the past 20 years.
The endowment’s asset allocation targets for fiscal 2018 are absolute return, 25.0%; venture capital, 17.0%; foreign equity, 15.5%; leveraged buyouts, 14.0%; real estate, 10.0%; bonds and cash, 7.5%; natural resources, 7.0%; and domestic equity, 4.0%.