Endowment earns 12.5% return

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(Photo by Michael Marsland)

Yale’s endowment earned a 12.5% investment return for the year ending June 30, 2013. The endowment value grew from $19.3 billion on June 30, 2012, to $20.8 billion on June 30, 2013. The university benefited from investment gains of approximately $2.3 billion and spending distributions of more than $1.0 billion.

Spending from the endowment for Yale’s 2014 fiscal year is budgeted at $1.05 billion, representing approximately 35% of the university’s net revenues. Endowment distributions to the operating budget have more than doubled in the last decade.

The university’s longer-term results remain in the top tier of institutional investors. Yale’s endowment returned 11.0% per annum over the 10 years ending June 30, 2013, surpassing broad market results for domestic stocks, which returned 8.1% annually, and for domestic bonds, which returned 4.5% annually. Relative to the estimated 7.8% average return of college and university endowments, over the past decade, Yale’s investment performance added $7.0 billion of value in the form of increased spending and enhanced endowment value. During the 10-year period, the endowment grew from $11.0 billion to $20.8 billion.

Over the past two decades, Yale’s endowment generated returns of 13.5% per annum. Compared to the estimated 8.7% average return of college and university endowments, Yale’s investment performance added $18.4 billion of incremental value. During the 20-year period, the endowment grew from $3.2 billion to $20.8 billion.

Long-term asset class performance

Yale’s 10-year asset class performance remains strong. Domestic equities returned 10.8%, besting the benchmark by 2.7% annually.  Foreign equities produced returns of 19.3%, surpassing the composite benchmark by 8.4% annually. Absolute return produced an annualized return of 9.7%, while private equity returned 14.4%. Real estate and natural resources contributed annual returns of 7.2% and 15.6%, respectively.

Asset Allocation

Yale continues to maintain a well-diversified, equity-oriented portfolio, with the following asset allocation targets for fiscal 2014:

Private Equity:            31%

Absolute Return:         20%

Real Estate:                19%

Foreign Equity:            11%

Natural Resources:        8%

Domestic Equity:          6%

Bonds and Cash:           5%

Campus & Community