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Ivy League Endowments Lag 60-40 Portfolio

None of the elite universities’ endowments beat a 60-40 portfolio over the past decade.

By Michael Katz

Despite reporting strong returns for the second straight year, Ivy League university endowments have lagged behind a simple portfolio comprised of 60% stocks and 40% bonds over the past 10 years, according to a report from Markov Processes International.

“The Ivies continued the strong results of FY 2017, with all but Columbia registering double-digit returns in FY 2018, and all beating a 60-40 portfolio,” Markov Processes said in a release. However, it added, “it is the first time in the 20 years of available Ivy endowment returns data that a 60-40 portfolio outpaces all Ivies in terms of 10-year performance.”

The report said that from fiscal year 2009 to 2018, a portfolio made up of 60% stocks and 40% fixed income had annualized returns of 8.1%. Meanwhile not even the top-performing Ivy League endowments beat this over the same time period as Columbia University and Princeton University’s endowments were a shade behind with annualized returns of 8.0% each.

They were followed by the University of Pennsylvania, Yale University, and Dartmouth University, which had annualized returns of 7.7%, 7.4%, and 7.3%, respectively, during the same time period. And the worst-performing Ivy League endowments from 2009 to 2018 were Harvard University, Cornell University, and Brown University, with annualized returns of 4.5% 4.8%, and 5.9% respectively.

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As of July, the combined assets under management of the Ivy League endowments was $135.7 billion, according to Markov Processes, which is an increase of $11.5 billion from fiscal year 2017. The report said that assets among all endowments nationwide rose 68% between 2009 and 2017, and during that time, the portion that was overseen by Ivy League endowments has declined to 22.1% from 23.7%.

The firm said that endowment performance should be evaluated in three ways. The first is by examining if the endowments preserve value and purchasing power after spending. Because the target payouts of Ivy League endowments are around 5%, and inflation has been around 2.8% over the past 10 years, this means they have had to beat a combined return of around 7.8% to cover expenses.

The second way, said the report, is to compare the performance against broad measures of equity and debt markets. This can highlight whether investments made by the endowments in the private markets achieve better returns than the public ones. And the third way to evaluate performance is to see whether endowments keep pace with peers that have similar mandates.

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Home > News > Newsmakers > Ted Eliopoulos Joining Morgan Stanley
Newsmakers

Ted Eliopoulos Joining Morgan Stanley

The former CalPERS CIO will oversee six investment team leaders and bolster the investment bank’s relationships with its asset owner clients.

By Chris Butera

Theodore “Ted” Eliopoulos



Morgan Stanley has created a new position, and it’s being filled by Ted Eliopoulos, the departing chief investment officer of the $360 billion California Public Employee Retirement System (CalPERS), the bank confirmed.

Eliopoulos’ new role as vice chairman of investment management and head of strategic partnerships will be waiting for him in January, when he moves to New York, he said in an interview with Pensions and Investments.

He told the publication that the $471 billion investment bank tailored the gig for him “to help build and maintain strategic partnerships with asset owner clients of MSIM.”

In addition to strengthening Morgan Stanley’s asset owner relations, Eliopoulos will work closely with investment and client teams across its business to deepen partnerships with top clients and serve as a senior advisor to CIOs. He will report to Daniel Simkowitz, the bank’s head,  join the investment management operating committee, co-chair the investment management’s sustainable investing council, and sit on investment committees in Morgan Stanley’s private businesses, according to an internal memo obtained by CIO.

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“Ted’s unique perspective leading a world-class asset owner, as well as his deep expertise in alternatives, ESG, and portfolio construction, afford him a unique perspective that will help MSIM deliver differentiated value to our clients,” Simkowitz said in the memo.

Eliopoulos knows Morgan Stanley because the fund hired the bank to help stabilize and rebuild its housing portfolio, which lost $3.2 billion in fiscal 2008, bringing its $9.3 billion in assets down to $6.1 billion. Today, housing occupies about 3% of the fund’s $31.8 billion real estate portfolio. Due to his previous work with the organization, California state law prevents him from approaching his former institution.

Eliopoulos became CalPERS CIO in 2014. At the time of the financial crisis, he was the plan’s head of real estate. After four years as CalPERS’ CIO, Eliopoulos announced he was leaving the pension fund in May to head east  with his family. His last day was November 16. Ben Meng, a former deputy CIO at China’s State Administration of Foreign Exchange and also a previous CalPERS director of asset allocation, will replace him as chief in January.

CalPERS declined comment. Morgan Stanley could not be reached for comment.

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