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Portfolio > Alternative Investments > Private Equity

How Ivy League Endowment Performance Stacked Up

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Princeton University, Princeton, New Jersey Princeton’s endowment returned 14.2% in fiscal 2018.

Ivy League endowments continued their strong performance in fiscal 2018 (ended June 30), with all but one registering double-digit returns and all beating a 60–40 U.S. stocks-and-bonds portfolio, the research and analytics firm Markov Processes International reported last week.

However, for the first time in the 20 years of available Ivy endowment returns data, the 60–40 portfolio outpaced all Ivies in terms of 10-year performance. For 15- and 20-year performance, the Ivies still maintained an edge on the benchmark.

Following are the Ivies’ 2018 fiscal year performance, compared with the previous year:

  • Princeton: 14.2% vs. 12.5%
  • Brown: 13.2% vs. 13.4%
  • University of Pennsylvania: 12.9% vs. 14.3%
  • Yale: 12.3% vs. 11.3%
  • Dartmouth: 12.2% vs. 14.6%
  • Cornell: 10.6% vs. 12.5%
  • Harvard: 10% vs. 8.1%
  • Columbia: 9% vs. 13.7%

The report said Columbia’s single-digit return was unexpected given its apparent asset class exposure, and suggested this may have had to do with the endowment’s 2016 change in management.

According to Markov, Columbia and Princeton reported the top performance over the 10-year period to June, each with a return of 8% against the benchmark’s 8.1%. Harvard, with by far the biggest endowment in the Ivy League at $37 billion, generated a return of 4.5%, below its annual payout target of 5% to 5.5%.

Exposure to private asset classes — private equity, venture capital, hedge funds and real estate — remained high, and for some Ivies it appeared to increase, the report said.

In the 2018 fiscal year, private equity and venture capital exposure were among the biggest contributors to returns across most Ivies.

The report said estimated Ivy endowment risks remain significantly higher than a 60-40 portfolio, primarily driven by investments in real estate and private equity. As a result, none of the Ivy League endowments were as efficient as a 60–40 portfolio over the last 10 years, as measured by Sharpe ratio: 0.87 for the benchmark, compared with 0.72 for Penn, the top Ivy, 0.69 for Columbia and 0.38 for Harvard.

— Check out Top 20 Richest Colleges of 2015: The Biggest Endowments on ThinkAdvisor.


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