Thursday, August 4, 2016

The Trouble With Endowments

If you think the S&P 500 hasn't performed up to your expectations lately, it could be worse: It could be a college endowment fund. Endowment funds lost a median 0.74 percent in the fiscal year through June 30, according to results published Tuesday by Wilshire Trust Universe Comparison Service.

After double-digit gains in fiscal 2014, endowment performance trailed off in fiscal 2015 to 2.8 percent. In the past 10 years, the worst year for returns was 2009, the year of the market crash, with a loss of 21.8 percent for the richest schools.

The largest endowments are no longer mostly invested in U.S. equities. Endowments follow a model designed by Yale University, which now invests more than 50 percent of its fund in private equity and other illiquid assets. For endowments with more than $1 billion, only 13 percent of assets in fiscal 2015 were allocated to domestic equities.

No comments:

Post a Comment