Investment Return of 21.9% Brings Yale Endowment Value to $19.4 Billion

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Yale’s endowment earned a 21.9% investment return for the year ending June 30, 2011, Chief Investment Officer David Swensen announced today. The endowment value rose to $19.4 billion based on investment gains of $3.6 billion and operating budget distributions of $1.0 billion. The endowment totaled $16.7 billion as of June 30, 2010.

Spending from the endowment for the University’s 2011-2012 fiscal year is budgeted at $992 million, representing approximately 37% of the University’s net revenues. Endowment distributions to the operating budget have grown by nearly threefold in the last decade.

The University’s longer term results remain in the top tier of institutional investors. Yale’s endowment returned 10.1% per annum over the 10 years ending June 30, 2011, surpassing results for stocks, which returned 3.9% annually, and for bonds, which returned 5.1% annually.

Relative to the estimated 6.2% average return of college and university endowments, over the past decade Yale’s investment performance added $7.4 billion of value in the form of increased spending and enhanced endowment value. During the 10-year period, the endowment grew from $10.7 billion to $19.4 billion.

Over the past two decades, Yale’s endowment generated returns of 14.2% per annum. Compared to the 9.4% average return of college and university endowments, Yale’s investment performance added $15.7 billion of incremental value. During the 20-year period, the endowment grew from $2.6 billion to $19.4 billion.

Performance Discussion
Domestic equity returned 24.5% for the fiscal year, underperforming the benchmark return by 7.8%. Foreign equity exceeded its benchmark by a margin of 12.5% with a return of 40.7%. Yale’s absolute return portfolio produced a 12.7% return, consistent with both expectations and past experience. Real assets, comprised of real estate and natural resources, returned 16.5% after two years of poor results. The University’s private equity portfolio rebounded from crisis-induced losses with a robust return of 30.3%.

Yale’s 10-year asset class performance remains strong. Domestic equities returned 7.6%, besting the benchmark by 3.7% annually. Foreign equities produced returns of 18.6%, surpassing the benchmark by 7.0% annually. Absolute return produced an annualized return of 10.2%, while the illiquid asset classes of private equity and real assets contributed annual returns of 10.2% and 11.0%, respectively.

Asset Allocation
Yale continues to maintain a well-diversified, equity-oriented portfolio, with the following asset allocation targets for the fiscal 2012 year:

  • Private Equity: 34%
  • Real Estate: 20%
  • Absolute Return: 17%
  • Natural Resources: 9%
  • Foreign Equity: 9%
  • Domestic Equity: 7%
  • Bonds and Cash: 4%

The Yale Endowment contains thousands of funds with a variety of designated purposes and restrictions. Approximately three-quarters of funds are gifts restricted by donors to provide long-term funding for designated purposes.

Donors frequently specify a particular purpose for gifts, creating endowments to fund professorships, teaching, and lectureships (24 percent), scholarships, fellowships, and prizes (18 percent), maintenance (4 percent), books (3 percent), and miscellaneous specific purposes (26 percent). Twenty-five percent of funds are unrestricted.

Thirty-five percent of the Endowment benefits the overall University, with remaining funds focused on specific units, including the Faculty of Arts and Sciences (29 percent), the professional schools (23 percent), the library (7 percent), and other entities (6 percent).

David Swensen, Yale chief investment officer, discusses the University’s endowment investment strategy.

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Tom Conroy:, 203-432-1345