The bad news is that the financial performance of the Yale University endowment for the 2018 fiscal year (ended June 30) lagged that of many of its peer institutions, including Princeton, Stanford and MIT.
The good news is that the university still has enough capital salted away for a rainy day: an endowment that over the past 12 months swelled to $29.4 billion.
So there’s scant reason to weep for the Blue Mother. Yale’s endowment for the fiscal year grew by 12.3 percent, the Yale Investments Office announced on Monday. That rate of return would have the average private investor turning cartwheels, of course. It also outpaced the performance of principal rival Harvard, whose portfolio grew by a mere 10 percent in fiscal 2018.
Other elite institutions did better. For the most recent year Princeton’s endowment returned 12.5 percent, Stanford’s 13.1 percent and MIT’s 13.5 percent. The median return for university endowments larger than $1 billion was 9.2 percent for fiscal 2018, according to preliminary date from Cambridge Associates.
Under Chief Investment Officer David F. Swensen, Yale’s investment portfolio has posted industry-leading returns for two decades. Over the past 10 years, Yale’s endowment has returned an average of 7.4 percent per year, comfortably outpacing the 5.5-percent average return of all U.S. university endowments, according to a Yale press release. During that period Yale’s endowment — the world’s second-largest university endowment — has grown from $22.9 billion to $29.4 billion.
Notably, the chief investment officers at Princeton, Stanford and MIT — whose endowments all outperformed Yale’s this year — all once worked for the Yale Investments Office, where they learned their trade at the feet of Swensen, the acknowledged master.
“Yale cannot win all the time,” Roger Ibbotson, a Yale School of Management finance professor, told the Yale Daily News. “I think Yale has done very well in the long run, and that’s all that matters.”
Contact Michael C. Bingham at mbingham@newhavenbiz.com
