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Preliminary Commonfund Data Show Endowment Returns Improve

September 25, 2003

Average return-on-investment rates are in positive territory after two consecutive years of losses, according to a report released earlier this month. An interim report of the Commonfund Benchmarks Study shows an average return rate of 2.9 percent among 122 responding educational endowments, compared to negative 5.4 percent among 97 respondents in 2002. The 2002 NACUBO Endowment Study showed an average negative 6 percent return rate with 654 colleges and universities participating.

Average asset allocation data also show significant shifts from FY 2002 to FY 2003. Commonfund respondents decreased their holdings in alternative investments and returned to U.S. stocks and bonds, reversing a two-year trend. The average allocation to alternative investments decreased from 15 percent of total assets in FY 2002 to 11 percent in FY 2003, while stocks increased from 47 percent to 50 percent. International stocks remained flat at 10 percent.

Within the alternative investment category, allocation to hedge funds increased significantly, from 37 percent to 42 percent, while both venture capital and private equity investments decreased. Modest allocation increases were seen in the energy and real estate categories.