The ATEL Monthly

Endowments Suffering in Volatile Markets

Earlier this month the Wilshire Trust Universe Comparison Service released a report stating that over a dozen university endowments with assets of more than $1 billion will have investment declines for the 2016 fiscal year. The average endowments with more than $500 million under management lost a median .73%.

Of the big Ivies, Cornell posted the worst performance for fiscal year 2015 with a 3.3% loss. Harvard and Dartmoth were also reporting similarly poor returns. Harvard, soon to install its eighth manager in 12 years, posted a 3.4% loss on its $35.7 billion endowment.

Only one Ivy League endowment came ahead; Yale announced that its $25 billion endowment grew 3.4%. Yale Chief Investment Officer David Swensen has managed the school’s endowment for over 30 years. This past spring, Yale’s venture capital portfolio earned an annualized return of 18%.

As for public endowments, the University of California and Ohio State reported a 3.4% decline- both with AUM over $1 billion. Coming in third, the University of Virginia posted a 1.5% loss.

Jagdeep Bachher, chief investment officer at the University of California, said investment losses were driven by poor returns from public equity fund managers and hedge funds. John Lane, chief investment officer at Ohio State’s endowment, blamed “central bank actions, slow-to-no growth worldwide, collapsing oil prices, and the unexpected Brexit vote”.

The Wilshire service also notes that their traditional portfolio, a 60/40 blend known as the Wilshire 5000 and their Wilshire Bond Index returned 4.5%.