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Newsmakers

Duke Endowment Returns 12.7%, Hits All-Time High

Endowment value climbs to record $7.9 billion.

By Michael Katz

Duke University’s long-term pool, the primary investment vehicle for its endowment assets, earned a 12.7% investment return for the fiscal year ending June 30, pushing the endowment’s value to an all-time high of $7.9 billion.

The 2017 results outperformed the fund’s returns from last year, a 2.6% loss for the year ending on June 30, 2016.  During that time, the MSCI All Country World Index was down 3.7%, and the Barclays Capital Aggregate Index gained 6%. However, this year’s returns were just short of the broad universe of US colleges and universities, which generated a median 12.9 % during the same period, according to Cambridge Associates. 

Further details of the fund’s performance have yet to be disclosed.

The university’s investment company, Duke University Management Company’s (DUMAC) goal is for the long-term pool to earn an annualized real rate of return of at least 5.0% net of fees to fund the university’s spending, and to allow for growth of the endowment after factoring in inflation. Over the past 10 years, the average annual return on the long-term pool has been 6%.

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One of the fund’s long-term benchmark is a composite of 70% MCSI All Country World Index and 30% Barclays Capital Aggregate Index. The MCSI index represents the broad global equity market, and the Barclays index represents the domestic bond market. The firm said it chose the mix between equity and bonds because a 70% exposure to equity investments historically has achieved the university’s 5.0% real annual return objective over the long term.

The endowment’s main peer benchmark is the Cambridge Associates Universe. DUMAC seeks to achieve performance over successive rolling three-, five-, and 10-year periods in excess of the median return for the benchmark.

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Home > News > Newsmakers > Yale’s Endowment Returns 11.3%, Below Higher Ed Median
Newsmakers

Yale’s Endowment Returns 11.3%, Below Higher Ed Median

Asset value rises nearly $2 billion to $27.2 billion.

By Michael Katz

Yale University’s endowment reported an 11.3% investment return (net of fees) for the year ending June 30, boosting its total asset value to $27.2 billion from $25.4 billion at the same time last year.

The results fell short of the 12.9% return produced by the broad universe of college and university endowments as measured by consulting firm Cambridge Associates. However, the endowment easily outperformed last year’s returns of 3.4%.

The endowment returned 12.1% per year over the 20 years ending June 30. The Yale Corporation Investment Committee said this beats the broad market results for domestic stocks, which returned 7.5% annually, and domestic bonds, which returned 5.2%. During that same period, the endowment grew from $5.8 billion to $27.2 billion.

Over the past 20 years, the endowment’s domestic equities returned 12.2% annually, beating its benchmark by 4.7%, while foreign equities returned 14.1% a year, surpassing the composite benchmark by 7.8%. Absolute return, leveraged buyouts, and venture capital investments returned 8.9%, 12.6%, and 106.3%, respectively, while real estate and natural resources contributed annual returns of 10.3% and 15.2%, respectively.

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Spending from the endowment is projected to be $1.3 billion for fiscal year 2018, representing approximately 34% of the university’s net revenues. Endowment distributions to the operating budget have increased at an annualized rate of 9.2% over the past 20 years.

The endowment’s asset allocation targets for fiscal 2018 are absolute return, 25.0%; venture capital, 17.0%; foreign equity, 15.5%; leveraged buyouts, 14.0%; real estate, 10.0%; bonds and cash, 7.5%; natural resources, 7.0%; and domestic equity, 4.0%.

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