Oregon, Virginia, Dartmouth Endowment Returns: Low, High, and Even Higher

The endowments of three noted universities increased for the year, with a wide range of returns.

The portfolio for Dartmouth College’s endowment returned 7.6% for the fiscal year ending June 30, boosting the endowment’s total value to $6 billion. The college said that over the past 10 fiscal years, the endowment has generated an annualized return of 10.4%. It also said that during the fiscal year, the endowment contributed approximately 30%, or more than $270 million, to the college’s annual operating budget.

“Given the financial challenges facing institutions of higher education, including Dartmouth, as a result of the COVID-19 pandemic and how volatile the markets were in the second half of the fiscal year, we are very pleased with this result,” Dartmouth President Philip Hanlon said in a statement. “Over the longer term, the strength of the endowment continues to enable Dartmouth to invest in key long-term strategic initiatives.”

Meanwhile, the University of Virginia (UVA) endowment’s long-term pool returned 5.3% for the fiscal year ending June 30, outperforming its benchmark portfolio’s return of 3.3%. The gains increased the endowment’s total asset value to $9.9 billion from $9.6 billion last year.

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According to the University of Virginia Investment Management Company (UVIMCO), the portfolio earned 10- and 20-year annualized returns of 10.1% and 8.6%, respectively. UVIMCO said the long-term returns outperformed both its benchmark’s portfolio and the Wilshire Trust Universe Comparison Service (TUCS) All Master Trust Universe. UVIMCO attributed its long-term outperformance to its active management of the fund.

“Consistently outperforming passive indexes is difficult, but it can be done,” UVIMCO said in its 2020 annual report. The management firm added that it “has a long history of partnering with exceptional investment managers who have demonstrated the ability to generate alpha through disciplined investment processes, novel insights, and hard work.”

The portfolio’s target asset allocation is 65% equity, 25% fixed income, and 10% real assets.

While the Virginia and Dartmouth endowments posted relatively strong returns, the University of Oregon’s endowment portfolio returned a paltry 1.1% for the fiscal year ending June 30, falling far short of its benchmark’s return of 5.7%. The meager gains helped nudge the endowment’s total market value up to $930 million.

The UO Foundation, which manages the endowment, reported annualized returns over the last three and five years of 4.8% and 5.2%, respectively, underperforming its benchmark’s three- and five-year annualized returns of 6.8% and 6.6%, respectively. However, the endowment outperformed over the past 10 years, returning 7.8% over that time compared with 6.8% for its benchmark.

The portfolio’s asset allocation is 57% growth, 27% risk reduction, and 16% inflation reduction. Growth includes publicly traded and privately held global equities; risk reduction includes commodity, fixed-income, and complex hedging strategies; and inflation protection includes long-term capital appreciation through commercial real estate, energy infrastructure, commodities, and natural resources.