Higher education endowments lose net 0.3% on investments — report

Yale
Yale University's Harkness Hall

U.S. college and university endowments returned an average -0.3% net of fees for the fiscal year ended June 30, according to preliminary data from Commonfund Institute and the National Association of College and University Business Officers.

Endowments with $1 billion or more in assets were the top performers for the year, returning an average 1.2%. Those with less than $25 million returned an average 0.2%, and endowments between $500 million and $1 billion returned 0.1%.

Endowments with $101 million to $500 million in assets returned -0.5%, and $25 million to $50 million, -0.8%.

Endowments with $51 million to $100 million in assets had the lowest performance, at -1%.

For the 215 institutions that have reported longer-range data, the average annualized three-year return as of June 30 was 10.4%; five-year, 1.5%; and 10-year, 6.1%. All numbers are net of fees.

While the range of asset returns is relatively small for the year, the average allocations of endowments vary greatly based on size.

The largest endowments average a 59% allocation to alternatives; endowments with $500 million to $1 billion in assets average a 49% allocation to alternatives, while plans with less than $25 million in assets have an average alternatives allocation of 14%.

The preliminary numbers come from 463 colleges and universities. Final results will be released in January; last year's report analyzed 823 respondents that had an average investment return of 19.2%.