University of Nebraska Foundation posts fiscal-year return of 14.5%

University of Nebraska Foundation's $2 billion endowment returned a net 14.5% for the fiscal year ended June 30.

The endowment's return was short of its policy benchmark return of 16.8% for the period, according to a report from Brian Neale, chief investment officer, posted on the Lincoln-based foundation's website.

For the most recent fiscal year, the endowment's return was the second highest among the 46 college and university endowments whose most recent fiscal-year returns have been tracked by Pensions & Investments as of Nov. 13. The median return is 10%.

For the five years ended June 30, the endowment returned an annualized net 8.5%, just shy of its policy benchmark annualized return of 8.6%.

The endowment had returned a net 9.8% for the fiscal year ended June 30, 2023.

Neale said in the report that for the most recent fiscal year, domestic equities was the top performer with a net return of 19.9%, above its benchmark of 19.4%, and public real assets was a strong performer as well, posting a net return of 10.5%, well above its benchmark return of 4.4%.

Lagging behind was private investments, which returned a net 10.9% for the period, well below its 20.7% benchmark.

"We measure our private investments against a blended benchmark of public market indices plus 3%, as our philosophy is that in exchange for the illiquidity of private investments, we should expect to earn at least a public market equivalent plus 3% annually," Neale said in the report. "During FY24, the private investment portfolio did not outpace extraordinarily strong public markets fueled in large part by the 'Magnificent Seven.'"

“While it is disappointing to see short-term underperformance, on a longer-term basis, private investments have far outpaced their benchmarks and have added significant gains to the overall portfolio. During the annualized three- and five-year periods, the private investment portfolio outperformed its benchmark by 2.8% and 1.5%, respectively,” Neale said.

The report did not provide specific return data for the other asset classes.

As of June 30, the endowment's actual allocation was 59.1% public equities, 25.2% private investments, 7.4% real assets, 5.7% multiasset credit, 1.6% transition to equity and private investments, and 1% fixed income and cash.