College and university endowments returned an average net 7.7% in the fiscal year ended June 30, according to the 2023 National Association of College and University Business Officers-Commonfund Study of Endowments.
The average return represented a solid turnaround from the prior fiscal year, when endowments returned an average net -8% for the fiscal year ended June 30, 2022.
"From the point of view of college and university chief business officers, the results of this year's endowment study are ideal — a sound rate of return demonstrating good fiscal stewardship leading to additional resources available to the students, faculty, and programs that are our core mission," said Kara Freeman, NACUBO president and CEO, in a Feb. 15 news release.
NACUBO, which marks 50 years of conducting the annual study in 2024, said in the news release that while the fiscal year ended June 30 began haltingly, the final nine months of the fiscal year were dominated by strong performance by global public markets. Public fixed income was relatively flat, although by doing so, well outperformed the previous fiscal year.
For the year ended June 30, the Russell 3000 and Bloomberg U.S. Aggregate Bond index returned 19% and -0.2%, respectively, well above the respective returns of -13.9% and -10.3% for the year ended June 30, 2022.
Alternatives were less successful in the fiscal year ended June 30, which led to institutions with larger allocations to the asset class to lag behind smaller endowments, which traditionally hold lower allocations to alternatives.
By size, the best-performing endowments were those with under $50 million in assets, which returned an average net 9.8% for the fiscal year ended June 30, while the worst-performing endowments were those with over $5 billion in assets. That cohort returned an average net 2.8%.
However, when looking at the 10 years ended June 30, endowments with over $5 billion in assets topped the list, returning an annualized net 9.1%, while those with under $50 million were the lowest returners with an annualized net 6.5%.
Overall, the 688 institutions participating in the survey reported total assets of $839.1 billion as of June 30, up 4% from a year earlier.
The study is a partnership between NACUBO and Commonfund Institute. The survey was conducted between September and December of 2023.
