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Preliminary Data Show Endowments Returned 19.8 Percent in FY 2011

November 7, 2011

Commonfund Institute and the National Association of College and University Business Officers (NACUBO), the joint sponsors of the 2011 NACUBO-Commonfund Study of Endowments® (NCSE), announced today that preliminary data gathered from 284 U.S. colleges and universities indicate that these institutions’ endowments returned an average of 19.8 percent (net of fees) for the 2011 fiscal year (July 1, 2010 – June 30, 2011). Among this group, the highest return earned for FY2011 was 31.8 percent and the lowest was 3.7 percent. Institutions in the Study range from those with endowment assets under $25 million to those with assets in excess of $1 billion.

The FY2011 effective spending rate for the group averaged 4.3 percent, but for the two largest endowment cohorts with assets over $500 million the effective spending rates were 5.1 percent and 5.0 percent, respectively.

“What stands out in these preliminary figures is the fact that, despite the positive returns of this year and last, endowments still have not completely recovered from the damage inflicted by the market declines that accompanied the 2008-09 credit crisis," NACUBO President and Chief Executive Officer John D. Walda and Commonfund Institute Executive Director John S. Griswold said in a joint statement. “The average endowment is still at only 86 percent of its value in FY2007, using return data from past NCSE reports and a 5 percent spending rate,” they noted, “and longer-term returns for five- and ten-year periods are only 5.0 percent and 5.5 percent, respectively – not significantly higher than the spending rate for many institutions. It will take several more years of positive returns for endowments to recover fully from the crisis.”

In the past, larger endowments have tended to significantly outperform smaller ones. This year’s sample, however, reveals a very tight spread, as institutions with assets over $1 billion returned 20.2 percent on average, while those with assets below $25 million reported an average return of 19.1 percent. Mid-range endowments—those with assets between $101 and $500 million—reported an average return of 19.9 percent. The lowest average return—18.9 percent—came from endowments with assets between $25 and $50 million. The highest average return—20.3 percent—was reported by endowments with assets between $51 and $100 million.

While average returns were quite similar across size groups, the way they were earned varied widely. For example, institutions with assets over $1 billion reported allocations to domestic equities that averaged just 12 percent. At the opposite end of the size spectrum, endowments with assets below $25 million reported a 41 percent allocation. Similarly, the two largest size cohorts reported average fixed income allocations of 10 percent or less, while the three smaller size cohorts all had average fixed income allocations in excess of 20 percent. Major differences emerged once again in allocations to alternative strategies, as institutions with assets over $1 billion reported an average allocation of 58 percent, while institutions with assets under $25 million reported an average alternatives allocation of 9 percent. In general, allocations to international equities and short-term securities/cash/other were more consistent across the size cohorts. (All allocations are reported on a dollar-weighted basis.)

Researchers are still gathering and tabulating data for the full NCSE; final results will be released in late January. Last year’s NCSE reported and analyzed return data and a broad range of related information reported by 850 U.S. colleges and universities, both public and private, as well as their supporting foundations. The size and scope of the Study make it the most comprehensive annual report on the investment management and governance practices and policies of institutions of higher education across the U.S.

Final Study results and analysis will go into much greater depth—including data on governance policies and practices— and will break out data not only by size of endowment but also by type of institution (public, private and foundations).


Ken Redd
Director, Research and Policy Analysis