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Gains on university endowments at 11.7pct as investment returns recovers

January 28
3:53 AM 2014

Data from the National Association of College and University Business Officers or Nacubo and the Commonfund Institute revealed that university endowments were able to post an 11.7% average return in the year ending June 30, Bloomberg reported. This was an increase compared to the 0.3% loss suffered the year before.

The annual Nacubo-Commonfund endowment report said the yearly return in the past 10 years was 7.1%, which lagged below the average target of 7.4%. The survey, which covered 835 institutions holding assets of $448.6 billion, showed that smaller endowments were able to generate returns equivalent to or even better than that of richer schools as publicly traded stock markets outperformed alternative assets, the report said.

Washington-based Nacubo President and Chief Executive Officer John Walda told Bloomberg, "It's just one of those years where the numbers worked out so that the total return was very similar between small and big."

The groups said a lot of schools were able to take a breather with the recovery of investment returns since weaker revenue from tuition have caused them to struggle. The weak revenue was brought about by a drop in enrollments. Due to the lackluster economic recovery, even richer schools have made reductions in their budgets in an effort to keep tuition increases to a minimum while honoring their financial aid commitments, the report said.

The report said universities that have endowments bigger than $1 billion and those that less than $25 million were able to post the same annual average return of 11.7%. In a three-year period, the small schools were able to post a 10.6% gain outperforming that of wealthier institutions which returned an average of 10.5% annually in the same period, the report said.

In September, Harvard University said that for the year ending June 30, it was able to make an 11.3% return on its investments. Harvard, with an endowment of $32.7 billion, is the wealthiest school in the world, the report said. 

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