Endowment funds outperformed stocks and bonds for the year ended June 30, but finished behind stocks and ahead of bonds for longer time periods, a National Association of College and University Business Officers study shows.
Using an equal weighting, the mean endowment return for the year ended June 30 was 2.9%, vs. 1.4% for the Standard & Poor's 500 Stock Index, 1.2% for the Wilshire 5000 Index and -1.3% for the Lehman Brothers Aggregate Bond Index.
But for the 10 years ended June 30, endowment fund returns trailed the S&P 500 and the Wilshire 5000 Index. The mean return for endowments was 12.5%, while the S&P 500 and the Wilshire 5000 returned 15.1% and 14.5% respectively, according to the report. The Lehman Aggregate Bond Index returned 11.6%.
Results were similar over five years, with endowments returning 9.3% on an equal weighted basis, while the S&P returned 10.3%, the Wilshire 5000, 10.1%, and the Lehman Aggregate Bond, 8.5%.
The study notes endowment funds boosted their non-U.S. equity allocation in the year ended June 30 to 7.5% of assets from the previous year's 4.3%. Allocations to hedge funds rose to 1.1% of assets from 0.5%.
Both of those changes contributed to endowment fund outperformance in the year. The study was done by Cambridge Associates Inc., Boston.