Several major universities and colleges have posted their endowment returns for the 2023 fiscal year, and the initial pattern has been for investment results to be underwhelming.
Although some institutions realized small gains in their endowment’s position, others saw their results slip into the red for the year. While disappointing, the early reports suggest an improvement over last fiscal year, when returns from endowments decreased an average of 8%, the first year that colleges saw a negative average return since 2016.
Yale University’s endowment returned 1.8% for the year, yielding a gain of $759 million. After spending $1.8 billion for operations and receiving $292 million in gifts, the endowment’s value decreased from $41.4 billion on June 30, 2022 to $40.7 billion on June 30, 2023. The FY 2023 return was considerably below the 10.9% gain Yale has averaged over the past 20 years.
At Bowdoin College, the endowment gained only 0.6%. Bowdoin’s endowment was valued at $2.4 billion at the close of the fiscal year, which included the addition of approximately $39 million in gifts and other transfers. By comparison, the three-, five-, and ten-year annualized returns, net of fees, for Bowdoin’s endowment were 13.7 %, 11.5%, and 11.7%, respectively.
“It has been a difficult period for investors—including for Bowdoin—with the multiple headwinds of surging inflation, higher interest rates, a land war in Europe, and a technology market unwind,” said Bowdoin President Safa Zaki in the college’s news release. “Against this challenging backdrop, our investment team, led by Niles Bryant, and our Investment Committee, have done an excellent job of protecting the value of the Bowdoin endowment and preserving much of the extraordinary gains recorded in fiscal 2021.”
The University of Pennsylvania’s endowment saw an investment return of 1.3%, bringing its endowment assets to $21.0 billion as of June 30. Over the past five years, Penn’s endowment has returned an annualized 9.5%.
The Massachusetts Institute of Technology (MIT) reported its endowment took a 2.9% hit for the year, resulting in a decrease in its endowment assets to $32.3 billion. The loss followed a -5.3% return in fiscal 2022.
Duke University reported its endowment saw an investment loss of 1%, substantially below its goal of an annual return of 5%, and its second year in a row to post a loss. As a result, its endowment value fell to $11.6 billion, down from $12.1 billion at the end of FY 2022.
Stanford University saw its endowment return 4.4% in its merged pool for the fiscal year. Stanford’s five- and 10-year annualized returns were 9.5% and 9.4%, respectively. The value of the merged pool, which includes the university’s endowment and capital reserves of Stanford Health Care, Stanford Medicine Children’s Health, and other long-term funds, stood at $40.9 billion as of June 30, 2023.
Several public universities were reporting slightly better results, with some able to overcome their losses from the prior year. For example, Arizona State University saw a 4.3% increase, bringing its endowment value to $1.47 billion. According to a summary by Pensions & Investments, The University of Kansas reported a 4.5% increase, an improvement over its 2.8% loss the prior year. The University of Minnesota’s endowment increased 7%; Pennsylvania State University’s was up 3.9%; the University of Houston reported a 6.2% increase; and the University of Colorado posted a 7.8% return, following a 6.3% loss last year.
As more universities publish their latest endowment results, analysts will be looking to see if they’re consistent with these first reports that are pointing to a “well, at least it’s better than last year” trend. It’s been a turbulent year for markets, with the technology sector being particularly volatile. In addition, higher interest rates and poor performance by private equity funds have led to the sluggish performance of many institution’s portfolios.
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