Independent school endowments returned an average net 5.7% for the fiscal year ended June 30, according to an annual study from Commonfund Institute.
The study, which compiled return results for fiscal year 2019 from private, non-profit institutions enrolling students from kindergarten through 12th grade, showed a decline from the prior two fiscal years' average net returns of 7.4% and 11.8%, respectively.
For the three, five and 10 years ended June 30, the average annualized net returns were 8.4%, 5.6% and 8.1%, respectively.
School endowments with more than $50 million in assets reported an average net return of 5.1% for the fiscal year ended June 30, while those with $10 million to $50 million in assets reported a net return of 5.7%. Endowments with less than $10 million returned an average net 6.2%.
The average asset allocation as of June 30 was 29% domestic equities, 21% international equities, 17% marketable alternatives (which includes hedge funds and similar funds), 14% fixed income, 6% private equity, 4% short-term securities/cash/other, 3% venture capital, 2% each energy/natural resources and private real estate, and 1% each commodities/managed futures and distressed debt.
"In a period of generally strong performance in the U.S. stock market, schools with endowments under $10 million had the largest allocation to U.S. equities: 44% vs. 40% for midrange schools and 25% for institutions with larger endowments," said George Suttles, Commonfund Institute's director of research, in a news release about the study. "By contrast, certain alternative strategies, notably marketable alternatives, lagged over this period and, once again, smaller schools benefited by having the least exposure in this area."
Commonfund Institute gathered data from 250 independent schools with $13.1 billion in combined endowment assets.