Key Takeaways
- • Yale's endowment earned a 3.4% investment return for the fiscal year ending June 30, 2016, with its value declining from $25.6 billion to $25.4 billion after spending.
- • Endowment spending for fiscal 2017 is projected at $1.2 billion, about 34% of the university's net revenues, and has nearly doubled over the past decade.
- • Over 10 years, Yale's endowment returned 8.1% per annum versus 7.5% for domestic stocks and 5.1% for domestic bonds, adding $7.1 billion of value relative to the estimated 5.1% college and university endowment average.
- • Over 20 years, the endowment returned 12.6% annually, adding an estimated $22.1 billion relative to the 7.5% college and university endowment average.
- • Yale's fiscal 2017 targets are led by absolute return at 22.5% and venture capital at 16%, with a 30% minimum for non-correlated assets and a 50% cap on illiquid assets.
Summary
Yale University's endowment earned a 3.4% investment return for the year ending June 30, 2016, according to the university. The endowment value declined from $25.6 billion on June 30, 2015, to $25.4 billion on June 30, 2016, net of spending that supports faculty salaries, student scholarships and other expenses.
Spending from the endowment, the University's largest source of revenue, is projected at $1.2 billion for fiscal 2017, approximately 34% of Yale's net revenues. Endowment distributions to the operating budget have nearly doubled in the last decade, with an annualized increase in endowment spending of 5.9%. These distributions support, among other priorities, Yale's commitment to meeting the full financial need of every student enrolled in Yale College.
Yale reported longer-term results it described as in the top tier of institutional investors. Its endowment returned 8.1% per annum over the 10 years ending June 30, 2016, compared with 7.5% annually for domestic stocks and 5.1% for domestic bonds. Relative to the estimated 5.1% average return of college and university endowments, the university said its investment performance added $7.1 billion of value over the decade. Over 20 years, the endowment returned 12.6% per annum, compared with an estimated 7.5% average for college and university endowments, adding $22.1 billion of incremental value. The endowment grew from $4.9 billion to $25.4 billion over that period, net of spending.
By asset class, Yale's 10-year annualized returns were 10.5% for domestic equities, 13.7% for foreign equities, 5.9% for absolute return, 11.2% for leveraged buyouts, 15.9% for venture capital, 4.9% for real estate and 6.1% for natural resources. For fiscal 2017, Yale's targets are absolute return at 22.5%, venture capital at 16%, foreign equity at 15%, leveraged buyouts at 15%, real estate at 12.5%, bonds and cash at 7.5%, natural resources at 7.5% and domestic equity at 4%. Yale targets at least 30% of the endowment in non-correlated assets (cash, bonds and absolute return) and seeks to limit illiquid assets (venture capital, leveraged buyouts, real estate and natural resources) to 50% of the portfolio.
The university said roughly a quarter of endowment spending is donor-specified for professorships and teaching, nearly a fifth for scholarships, fellowships and prizes, and a quarter for general University purposes, with the remainder donor-designated to specific departments or programs. The Investments Office, led by Chief Investment Officer David F. Swensen and operating under the guidance of Yale's Investment Committee, manages the endowment.
Spending from the endowment, the University's largest source of revenue, is projected at $1.2 billion for fiscal 2017, approximately 34% of Yale's net revenues. Endowment distributions to the operating budget have nearly doubled in the last decade, with an annualized increase in endowment spending of 5.9%. These distributions support, among other priorities, Yale's commitment to meeting the full financial need of every student enrolled in Yale College.
Yale reported longer-term results it described as in the top tier of institutional investors. Its endowment returned 8.1% per annum over the 10 years ending June 30, 2016, compared with 7.5% annually for domestic stocks and 5.1% for domestic bonds. Relative to the estimated 5.1% average return of college and university endowments, the university said its investment performance added $7.1 billion of value over the decade. Over 20 years, the endowment returned 12.6% per annum, compared with an estimated 7.5% average for college and university endowments, adding $22.1 billion of incremental value. The endowment grew from $4.9 billion to $25.4 billion over that period, net of spending.
By asset class, Yale's 10-year annualized returns were 10.5% for domestic equities, 13.7% for foreign equities, 5.9% for absolute return, 11.2% for leveraged buyouts, 15.9% for venture capital, 4.9% for real estate and 6.1% for natural resources. For fiscal 2017, Yale's targets are absolute return at 22.5%, venture capital at 16%, foreign equity at 15%, leveraged buyouts at 15%, real estate at 12.5%, bonds and cash at 7.5%, natural resources at 7.5% and domestic equity at 4%. Yale targets at least 30% of the endowment in non-correlated assets (cash, bonds and absolute return) and seeks to limit illiquid assets (venture capital, leveraged buyouts, real estate and natural resources) to 50% of the portfolio.
The university said roughly a quarter of endowment spending is donor-specified for professorships and teaching, nearly a fifth for scholarships, fellowships and prizes, and a quarter for general University purposes, with the remainder donor-designated to specific departments or programs. The Investments Office, led by Chief Investment Officer David F. Swensen and operating under the guidance of Yale's Investment Committee, manages the endowment.
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