The estimated average return for large endowments — those having more than $1.1 billion — is around 3.4% for fiscal 2015, driven by low single-digit returns in listed equities. For the year ended June 30, global equities returned 2.06% as measured by the MSCI World index. On average, listed equities represented 36.4% of a large endowment's portfolio at the end of fiscal 2014, which was the largest of any asset class.
Real assets, which include real estate, returned an estimated 7.9%. Real estate was the biggest gainer in the year, with a 13.38% return. At the end of fiscal 2014, real assets on average represented 13.9% of a large endowment's portfolio.
For the nine months ended March 31, private equity returned 5.1% as measured by the Cambridge Private Equity index. Generally, private equity returns do not reflect publicly traded equity movements. Therefore, we added 70% of the return for the S&P 500 for the second quarter of 2015 to bring the estimated return of private equity to around 5.3% for the 12 months ended June 30.
With an average allocation of 15.9% at the end of fiscal 2014, private equity was the third largest allocation of large endowments.
Hedge funds, as measured by the HFRI Fund Weighted Composite index, returned 2.26% for the year ended June 30. Hedge funds had the second largest average asset allocation, at 20%, at the end of fiscal 2014.
The performance of core U.S. fixed income was up modestly in fiscal 2015. As measured by the Barclays Aggregate index, fixed income rose 1.86% for the year ended June 30. The average large U.S. endowment had a 10.1% allocation to fixed income. Cash, which returned 0.02% for the year as measured by the Citigroup 3-month Treasury bill index, had an average allocation of 2.2% at the end of fiscal 2014.
Several endowments and foundations that release quarterly investment performance information have shown modest returns through March 31. University of Washington, University of Florida Foundation and The University of Iowa Foundation returned 5.2%, 4% and 1.6%, respectively, for the nine months ended March 31.
