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Dartmouth Endowment Returns 12.2% in 2018

US, private equities help propel portfolio to a record-high market value of $5.5 billion.

By Michael Katz

Dartmouth College’s endowment reported its second straight year of double-digit gains as its investment portfolio returned 12.2% for the fiscal year ending June 30, to raise its total asset value to an all-time high of $5.5 billion.

The endowment earned $591 million in net investment gains, with gifts and other net transfers adding another $183 million. The spending distribution from the endowment was $237 million, which is approximately 25% of operating revenues for the fiscal year.

“Portfolio gains were driven by robust US equity markets combined with strong venture capital and private equity returns,” Alice Ruth, Dartmouth’s CIO, said in a release. “Dartmouth’s endowment is fortunate to partner with a roster of top-tier investment managers who add tremendous value.”

It was Ruth’s first full year as CIO, having assumed her role as head of the investment team in March 2017. In fiscal year 2017, the endowment generated an investment return of 14.6% to bring its asset value to a then-record $4.96 billion. It took in $630 million in net investment gains, with an additional $77 million in gifts and other net transfers last year.

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The endowment also reported a five-, 10-, and 20-year annualized returns of 10.6%, 7.6%, and 9.8%, respectively.

Despite having the second-smallest endowment in the Ivy League next to Brown University, Dartmouth has had among the top-performing investment portfolios of any of the elite universities in recent years. According to investment research firm Markov Processes International, Dartmouth has been among the top-four performing Ivy League endowments five out of the previous six years.

At the end of the 2017 fiscal year, the endowment’s asset allocation was 37.8% in global equities, 24.9% in hedge funds, 18.4% in venture capital and private equity, 7.5% in fixed income and cash, 7.1% in natural resources, and 4.3% in real estate.

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Home > News > Market Moves > US Market Surges While Others Flag? Not for Long, Says JP Morgan
Market Moves

US Market Surges While Others Flag? Not for Long, Says JP Morgan

Bank’s strategist says ‘sugar high’ of American tax cuts will peter out, hurting domestic stocks.

By Larry Light

“It’s not your father’s trade war.” That phrase resonates around Wall Street as the White House and the Chinese regime exchange tit-for-tat tariff escalations. But the US stock market remains buoyant, while almost all the other major bourses worldwide are battered.

That kind of disparity can’t last, according to JP Morgan Chase strategists. In a note to clients, they call for shifting away from American stocks to others, notably those of emerging market countries, which have been in the dumper lately.

The stimulus for US equities from the recent federal tax cut, as well as currency and interest rate differences, will not last, they warned.

“The large US fiscal boost this year, as well as the delayed positive impact of weak USD and low rates from last year created a ‘sugar high’ for US assets this year,” the strategists wrote. “We expect convergence of macro fundamentals between US and international markets in the coming quarters; with equity markets tending to price forward fundamentals by six to 12 months, the time for the rotation may be now.”

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 Indeed, the S&P 500 is up almost 9% this year, and gained 0.54% Tuesday, despite the trade war intensification, with Beijing responding to President Donald Trump’s new duties on $200 billion in Chinese imports with sanctions on $60 billion in US goods. Meanwhile, China’s stocks are off almost 20% in 2018, although they did gain 1.82% on Tuesday, perhaps a sign that investors think the clash will be resolved soon. Collateral damage, at least in part: EM and developed market alike are for the most part down.

International politics aside, the JP Morgan contention has a longer-term focus, and it strikes a discordant note in an otherwise happy US investing scene. The current consensus is for a recession in 2020, when an ever-rising S&P 500 may well be a nostalgic memory.

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