Dartmouth College’s endowment recorded an 8.4% investment gain for the year ended in June, lifting the fund’s valuation above $8 billion but lagging far behind the surge in U.S. stocks.
The fund finished the fiscal year at a valuation of $8.3 billion after distributing about $430 million for the annual operating budget, Dartmouth said in a statement. The Hanover, New Hampshire-based school was the first of the eight Ivy League universities to report investment returns for the period.
Dartmouth’s moderate gain signals another middling year for big university endowments, which have missed out on some of the rally in U.S. equity markets after a long-term shift to alternative assets such as hedge funds and private equity.
Many investment managers reject the comparison to U.S. stocks, saying their funds are designed to support colleges over the long term with broad asset mixes that reflect their risk tolerance.
The S&P 500 index jumped 23% during the 12 months ending June 30. Endowments earned a median 10.6% before fees during the same period, according to Wilshire Trust Universe Comparison Service, which doesn’t name individual schools.
Private equity holdings, once a driver of strong performance, have lagged more recently. Universities typically report their annual endowment returns in September and October.
Colleges generally need annual gains of at least 7% to keep pace with annual spending on expenses such as financial aid and professor salaries, while also absorbing inflation on costs such as food in dining halls. Spending isn’t determined by a single year of performance, but rather by formulas based on three- or five-year averages.
