Brown University Endowment Returns 11.3% in Fiscal 2024

Brown University announced on Friday that the university’s endowment achieved an 11.3% return in fiscal 2024, the one-year period that ended June 30. Assets of the fund grew to $7.2 billion from $6.6 billion, a combination of $728 million in investment gains and $203 million in gifts during the fiscal year. The fund contributed approximately $281 million to the university’s operating budget.

The fund announced annualized three-, five-, 10- and 20-year returns of 2.8%, 13.1%, 10.8% and 9.5%, respectively.

“It is a privilege to report once again that the market value of Brown’s endowment stands at a new all-time high, as does the level of support it provides for the University’s mission,” said Brown CIO Jane Dietze in a statement. “Our investment performance this year and across the last two decades is a testament to steady guidance from our investment committee, supportive alumni, an exceptional group of external investment managers and a dedicated team in the Investment Office.”

Brown, so far the third Ivy League university to release its investment returns for fiscal 2024, followed a trend among its peers: stronger performance relative to the prior fiscal year, in which most endowments had published single-digit, or even negative, returns during a year in which the public markets boomed. For fiscal 2024, the endowments of peers Columbia University and Dartmouth College returned 11.5% and 8.4%, respectively.

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Brown achieved a 2.7% return in fiscal 2023 (fourth among the eight Ivy League institutions), and a negative 4.6% return in fiscal 2022 (seventh). As at its peers, the university’s endowment is heavily allocated to private markets; according to the fund’s fiscal 2023 report, 40% of the portfolio was allocated to private equity, 21% to absolute return strategies, 15% to equities and 7% each to fixed income and cash.

Dartmouth Endowment Returns 8.4% in Fiscal 2024

Keeping Endowments Safe From Hackers

Tags: Alternatives, Asset Allocation, Brown University, Endowments, Jane Dietze

Strong returns from its equity portfolios fueled Japan’s Government Pension Investment Fund’s 22.67% investment return for the fiscal year that ended March 31, when the pension giant had a total asset value of almost 246 trillion yen ($1.68 trillion), according to the GPIF’s 2023 annual report. That value has since risen to $1.73 trillion after the pension fund reported a 3.85% gain for the first quarter of fiscal 2024.

“Fiscal 2023 started in an environment where it was difficult to predict a significant rise in risk asset prices, due to the bankruptcies of some financial institutions in the United States and Europe at the end of fiscal 2022 and the continued rise in U.S. government bond yields,” the GPIF wrote in the report. “Looking back on domestic and international developments over the past year, war risks and geopolitical risks have heightened, and nationalism [has] spread further.”

Domestic equities were the top-performing assets for the pension fund during the fiscal year, returning 41.41%, followed closely by foreign equities, which earned 40.06%. The GPIF’s foreign bonds portfolio returned 15.83% for the fiscal year, while its investments in domestic bonds lost 2%.

The GPIF said that over the past four years, it has been refining its investment methodology by focusing on bringing the portfolio more in line with its policy asset mix, while seeking out “stable excess returns.” During fiscal 2023, according to the pension fund, it worked toward reducing risks that do not exist in the policy asset mix, such as spread products like corporate bonds. It also established a methodology to measure alternative asset performance by benchmarking against traditional assets and made efforts to improve the performance of ESG indices by engaging with index providers.

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“As a result, it has become possible to reduce the tracking error against the benchmark and therefore to further strengthen efforts to secure excess stable returns,” the GPIF wrote. The pension fund added that “it is extremely difficult” for its portfolio to earn an excess return of 1% or more while maintaining the current level of market risk within its policy asset mix.

“However, if we are able to consistently generate 0.1% or 0.2% of excess return every year, the compounding of even such small incremental returns will add up to a significantly large amount of profit over the long run,” the pension fund wrote in the report.