School endowments chalk up 2.8% return in 2020

Independent school endowments returned an average net 2.8% for the fiscal year ended June 30, according to an annual study from Commonfund Institute.

The study, which compiled return results for fiscal year 2020 from private, non-profit institutions enrolling students from kindergarten through 12th grade, showed a significant decline from the prior two fiscal years' average net returns of 5.7% and 7.4%, respectively.

For the three, five and 10 years ended June 30, the average annualized net returns were 5.8%, 5.5% and 7.7%, respectively.

School endowments with more than $50 million in assets reported an average net return of 2.7% for the fiscal year ended June 30 (down from 5.1% the previous fiscal year), while those with $10 million to $50 million in assets reported a net return of 2.4% (down from 5.7%). Endowments with less than $10 million returned an average net 3.3% (down from 6.6%).

The average asset allocation as of June 30 was 31% domestic equities; 19% international equities; 17% marketable alternatives (which includes hedge funds and similar funds); 15% fixed income; 6% private equity; 5% short-term securities/cash/other; 3% venture capital; and 1% each energy/natural resources, private real estate, commodities/managed futures and distressed debt.

Commonfund Institute gathered data from 200 independent schools with $9.8 billion in combined endowment assets. Fiscal year 2019 data came from 250 schools with $13.1 billion in combined assets.

"While the survey size declined this year after steady growth in recent years, we are gratified that the response was as robust as it was given the challenging environment that confronted independent schools across the nation," said George Suttles, executive director of the Commonfund Institute, in a news release about the study.