Investment return of 11.5% brings Yale endowment value to $25.6 billion

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David Swensen has been Yale's chief investment officer since 1985.

Yale’s endowment earned an 11.5% investment return (net of all fees) for the year ending June 30, 2015. The endowment value grew from $23.9 billion on June 30, 2014, to $25.6 billion on June 30, 2015, net of spending that supports faculty salaries, student scholarships, and other expenses. The university benefited from investment gains of approximately $2.6 billion.

Spending from the endowment, which is the largest source of revenue for the university, for Yale’s 2016 fiscal year is projected to be $1.2 billion, representing approximately 34% of the university’s net revenues. Endowment distributions to the operating budget have nearly doubled in the last decade, with an annualized increase in endowment spending of 6.4%. Those distributions support, among other priorities, Yale’s commitment to meeting full financial need of every student enrolled in Yale College.

The university’s longer term results remain in the top tier of institutional investors. Yale’s endowment returned 10.0% per annum over the 10 years ending June 30, 2015, surpassing broad market results for domestic stocks, which returned 8.2% annually, and for domestic bonds, which returned 4.4% annually. Relative to the estimated 6.6% average return of college and university endowments, over the past decade Yale’s investment performance added $8.5 billion of value in the form of increased spending and enhanced endowment value. During the 10-year period, the endowment grew from $15.2 billion to $25.6 billion, net of spending.

Over the past two decades, Yale’s endowment generated returns of 13.7% per annum. Compared to the estimated 8.5% average return of college and university endowments, Yale’s investment performance added $23.4 billion of incremental value. During the 20-year period, the endowment grew from $4.0 billion to $25.6 billion, net of spending.

Long-Term Asset Class Performance

Yale’s 10-year asset class performance remains strong. Domestic equities returned 12.3%, besting the benchmark by 4.1% annually. Foreign equities produced returns of 17.4%, surpassing the composite benchmark by 8.4% annually. Absolute return produced an annualized return of 7.2%. Leveraged buyouts returned 13.4%, while venture capital returned 18.0%. Real estate and natural resources contributed annual returns of 6.2% and 10.5%, respectively.

Asset Allocation

Yale continues to maintain a well-diversified, equity-oriented portfolio, with the following asset allocation targets for fiscal 2016:

Absolute Return: 21.5%

Leveraged Buyouts: 16.0%

Foreign Equity: 14.5%

Venture Capital: 14.0%

Real Estate: 13.0%

Natural Resources: 8.5%

Bonds and Cash: 8.5%

Domestic Equity: 4.0%

Yale’s spending and investment policies provide substantial support to the operating budget for current scholars, while preserving endowment purchasing power for future generations. Approximately a quarter is specified by donors to support professorships and teaching. Nearly a fifth is dedicated to scholarships, fellowships and prizes. A quarter is available for general university purposes. The remaining endowment funds are donor-designated to support specific departments or programs.

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