The primary investment vehicle of Stanford University returned 8.4% in fiscal 2024, the university announced on Thursday. Equities propelled the returns of Stanford’s merged pool, managed by the Stanford Management Co.
Performance across the fund’s private markets portfolio was muted in 2024, as in 2023, when the management company reported a 4.4% return.
“As was the case last year, strong results in publicly traded securities were diluted by weaker performance in non-marketable asset classes, including private equity,” said Robert Wallace, the Stanford Management Co.’s CEO, in a statement. “While private asset classes have detracted from recent performance, they have enhanced our results over longer periods and are likely to continue to do so in the coming decade.”
As of the university’s 2022 fiscal year, the merged pool had an asset allocation policy of 37% to private equity, 18% to absolute return strategies, 17% to international equity, 11% to real assets, 9% to fixed income and cash, and 8% to domestic equity.
While Stanford did not publicize its current benchmarks or asset allocation, the university noted that the fiscal 2024 performance of the merged pool trailed the median return of higher education endowments in the U.S., which stood at 10.1%, according to Cambridge Associates. A 70/30 portfolio returned 13.5% during the period, Stanford noted.
Stanford’s five- and 10-year investment performance (9.9% and 8.6%, respectively) exceeded the median return of U.S. higher education endowments (9% and 7%, respectively).
Stanford’s endowment makes up about 75% of the merged pool, which also includes the capital reserves of Stanford Health Care and Stanford Medicine Children’s Health and other long-term funds. The endowment also holds other assets, such as real estate, outside of the merged pool. Assets of the merged pool stood at $42.8 billion as of June 30, while assets of the endowment stood at $37.6 billion as of August 31, up from $36.5 billion on August 31, 2023.
In the fiscal year, the endowment distributed $1.8 billion to support academic programs at the university and for financial aid. The endowment funded more than 21% of Stanford’s operating expenses for the fiscal year and is budgeted to distribute $1.9 billion in fiscal 2025.
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Tags: Endowment, Robert Wallace, Standford, Stanford Management Company, Stanford University