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Endowments

Private school endowments chalk up 7.4% return in fiscal 2018

Independent school endowments returned an average net 7.4% for the fiscal year ended June 30, according to an annual study from Commonfund Institute.

The study, which compiled return results for fiscal year 2018 from private, non-profit institutions enrolling students from kindergarten through 12th grade, showed a decline from the prior fiscal year average net return of 11.8%. The results, however, were an improvement over fiscal years 2016 and 2015, which saw average net returns of -0.8% and 2.3%, respectively. For the three, five and 10 years ended June 30, the average annualized net returns were 6.2%, 7.3% and 5.5%, respectively.

School endowments with more than $50 million in assets reported an average net return of 8.2% for the fiscal year ended June 30, while those with $10 million to $50 million in assets reported a net return of 7.4%, while those with under $10 million returned an average net 6.2%.

"Just like we see with colleges and universities, independent schools are facing rising costs and limits on their ability to raise tuition," said Cathleen Rittereiser, executive director of the Commonfund Institute, in a news release about the study. "Raising non-tuition sources of revenue is an imperative, maximizing the returns of their endowments is an important part of that strategy."

The average asset allocation as of June 30 was 28% domestic equities, 22% international equities, 18% marketable alternatives (including hedge funds and similar funds), 13% fixed income, 6% private equity, 4% short-term securities/cash/other, 3% energy and natural resources, 2% each private real estate and venture capital, and 1% each commodities/managed futures and distressed debt.

Commonfund Institute gathered data from 223 independent schools with $12 billion in combined endowment assets.