Relative to the estimated 6.6% average return of college and university endowments, over the past decade Yale’s investment performance added $8.5 billion of value in the form of increased spending and enhanced endowment value.
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Harvard University’s endowment is the nation’s largest at $37.6 billion.
William Jarvis, managing director and head of research for the Commonfund Institute in Wilton, which serves as an investment manager for nonprofits, said Yale’s 11.5 percent return is third so far this year after Bowdoin College and the Massachusetts Institute of Technology.
Swensen’s influence extends beyond Yale. The average return for institutions and foundations with an endowment of over $500m is 3.6%, according to Wilshire Trust University Comparison Service.
Harvard earlier this week posted a 5.8 percent gain for the fiscal year ended June 2015, the latest in a series of mediocre years. Absolute return investing is unconstrained and can “go anywhere’ to achieve the most efficient risk-adjusted return for investors”. As a result of this performance, the University benefited from investment gains of approximately $2.6 billion – funds that are used in part to provide substantial support for current scholars, while also “preserving the endowment’s purchasing power for future generations”, according to Thursday’s press release.
The top performing asset class listed, however, was venture capital, which returned 18 percent over the last decade – nudging out the returns on foreign equities and accounting for 14 percent of the Yale portfolio, the report stated. Such investments make up more than half of the endowment’s assets. Almost a fifth is dedicated to scholarships, fellowships and prizes.
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The New Haven, Conn.-based school on Thursday also reinforced its support for a strategy pioneered by longtime endowment chief David Swensen that favors hedge funds and private equity over stocks and bonds.
