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Ivy Endowments Underperform for Second Consecutive Year

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Seven of eight Ivy League endowments underperformed a 60–40 portfolio of U.S. domestic stock and bonds in fiscal 2020, ended June 30, according to research from MPI.

Related: How College Endowments Invest for the Future

The exception was Brown, which returned 12.1%. This compared with the Ivy average return of 6.3% and the 8.8% return for the 60–40 quarterly rebalanced portfolio of the S&P 500 Index and the Bloomberg Barclays US Aggregate Bond Index.

Here’s a look at the Ivy endowments’ performance for fiscal 2019 and 2020:

  • Harvard: 2019 – 6.5%; 2020 – 7.3%
  • Yale: 2019 – 5.7%; 2020 – 6.8%
  • Princeton: 2019 – 6.2%; 2020 – 5.6%
  • Dartmouth: 2019 – 7.5%; 2020 – 7.6%
  • UPenn: 2019 – 6.5%; 2020 – 3.4%
  • Columbia: 2019 – 3.8%; 2020 – 5.5%
  • Cornell: 2019 – 5.3%; 2020 – 1.9%
  • Brown: 2019 – 12.4%; 2020 – 12.1%

The research showed that Ivy endowment results were fairly consistent during the past two fiscal years with the exception of Penn and Cornell, both of whose performance dropped significantly year over year.

MPI noted that domestic equities, bonds, private equity and hedge funds, all of which dominate Ivy portfolios, were similarly consistent over the past two years.

At the same time, real estate, commodities and foreign developed and emerging market equities experienced a significant drop in performance from FY2019, which may have echoed in the lower performing Ivy portfolios.

Related: Ivy League Schools Amass Large Land Portfolios

In addition, according to MPI, the 2020 fiscal year market behavior was a repeat of 2019 — though shifted by a quarter — despite the economic and human hardships caused by a global pandemic.

MPI said the consistency of Ivy returns for two consecutive years was not surprising, considering that the largest endowments’ huge size causes them to behave as index funds, with asset allocation explaining a large portion of endowment return movements both in variability and magnitude.

The fiscal 2020 Ivy average annualized 10-year return was 9.5%, compared with the domestic 60–40 portfolio 10-year result of 10.1%. After a tie in fiscal 2016, both posting 6.9%, the Ivy average underperformed the passive 60–40 benchmark on a 10-year rolling basis for the fourth fiscal year in a row.

Only Princeton has consistently outperformed 60–40; its 10-year return is 10.6%. Yale, with a 10.9% 10-year return, outperformed 60–40 every year except for 2018.

And Brown has been a stellar performer for the past two years.

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