Texas, MIT Endowments See Strong Gains; Illinois, Missouri Post Weak Returns

The endowments for the University of Texas/Texas A&M and the Massachusetts Institute of Technology (MIT) reported strong returns for the fiscal year that ended June 30; however, this was in sharp contrast to the endowment investment portfolios for the universities of Illinois and Missouri, which struggled during the year.

The University of Texas/Texas A&M Investment Company (UTIMCO)’s Permanent University Fund returned a robust 9.5% for the fiscal year, and just under 4% for the first half of 2020 to boost its total asset value to $24.38 billion. The endowment reported annualized three-, five-, and 10-year returns of 7.69%, 7.82%, and 8.04%, respectively. UTIMCO did not provide benchmark returns.

Meanwhile, the Massachusetts Institute of Technology Investment Management Company (MITIMCo) reported that MIT’s unitized pool of endowment and other funds returned 8.3% during the fiscal year ending June 30. The returns raised MIT’s endowment funds to a total of $18.38 billion, excluding pledges, from $17.44 billion at the same time last year.

The asset allocation for MIT’s portfolio is 69% in equities, 16% in marketable alternatives, 7% in fixed income, 5% in real estate, 2% in cash and short-term investments, and 1% in real assets.

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“During fiscal 2020, the institute demonstrated strong financial performance despite the profound challenges brought about by the COVID-19 pandemic,” MIT interim Treasurer Glen Shor wrote in the endowment’s report of the treasurer. “Prudent management of institute resources and strong investment performance since the Great Recession of 2008-09 provide us with reserves to absorb a significant measure of COVID-related fiscal pressures.”

Shor also said MIT is investing in the capacity to perform more than 100,000 COVID-19 tests each month for those accessing the campus.

While the Texas and MIT endowment portfolios performed well during the fiscal year, Illinois and Missouri did not weather the year as well. Despite returning 9.92% for the second quarter of the calendar year, the portfolio for the University of Illinois Foundation’s total endowment pool lost 2.49% for the fiscal year ending June 30. This was below its benchmark’s return of 0.06% during the same time period.

The Illinois endowment reported total assets under management of $1.88 billion, and three-, five-, and 10-year annualized returns of 2.79, 4.09%, and 7.20%, respectively, below its benchmark’s annualized returns of 4.52%, 4.80%, and 8.01%, respectively, over the same time periods. The portfolio’s asset allocation is 60% in global equity, 22% in macro risk hedges, and 18% in global diversifying.

“It is hard to know how to interpret current events rationally, but we will do our best to make sense of the moment,” the University of Illinois Foundation said in its investment report. “Our bottom line: This is a liquidity driven moment that seems divorced from economic and market fundamental reality and therefore unpredictable and dangerous.”

And the Office of Investments for the University of Missouri System reported a 1.15% return net of fees for the fiscal year ending June 30 to bring its endowment’s asset value to $1.73 billion. Missouri reported three-, five-, and 10-year annualized returns of 5.36%, 5.87%, and 7.91%, respectively. The portfolio’s target asset allocation is 35% in public equity, 15% in US Treasury inflation-protected securities (TIPS), 14% in US Treasuries, 10% in private equity, 10% in risk balanced, 8% in real estate, 5% in commodities, and 3% in private debt.