The larger the endowment, the better the performance over multiple periods, based on the 2022 NACUBO-TIAA Study of Endowments that examined 678 colleges and universities for the year ended June 30. Schools with more than $1 billion of assets lost 4.5%, while those that had less than $25 million had a -12.5% return for fiscal year 2022.
Over 10 years, the largest endowments produced an 8.7% annualized return, about 220 basis points higher than the smallest group.
For endowments with more than $1 billion of assets, the 25th percentile had a 7.8% annualized return over 10 years. This was 200 basis points less than the 75th percentile but higher than the median return for smaller endowments.
Asset allocation varied widely among the different-sized endowments. The larger ones had a lower portion invested in traditional equities and fixed income. They had a bigger share in alternatives, notably venture capital, private equity, hedge funds and real assets. NACUBO-TIAA attributed the higher performance to increased investments in private asset classes.
