WILTON, Conn. — More exposure to domestic and international stocks and less to hedge funds and other alternatives boosted the 2004 performance of the smallest U.S. foundations and operating charities, according to data from the Commonfund Benchmarks Study.
Average performance of the 317 participating funds slipped nearly six percentage points, to 11.4% from 17% in 2003. In 2002, by contrast, the average fund returned -8.7%.
Also, the smaller the fund, the better the performance.
The smallest foundations — those with less than $100 million in assets — returned 11.8% last year; the next smallest ($100 million to $500 million) returned 11.5%; midsized ones ($500 to $1 billion), 11.1%; and the largest foundations (with more than $1 billion), 10.7%.
In 2002 and 2003, the largest foundations outperformed the smallest.
John S. Griswold Jr., executive director of Commonfund, said lack of diversification helped the smaller funds outearn the larger ones in the survey, released June 9. "Smaller foundations were in general more exposed to garden-variety domestic and international stocks and less to alternative investments like hedge funds, and that helped them in last year's market," he said.