Yale Endowment Returned Almost 12 Percent

September 24, 2015       Mark Hrywna      

Yale University’s endowment earned an 11.5 percent investment return and grew to $25.6 billion last year. The university also had investment gains of about $2.6 billion for the year ending June 30, compared with $4 billion the previous year. The endowment returned 20.2 percent for the year ending June 30, 2014, when most university endowments averaged about 15.5 percent, according to the 2014 Study of Endowments.

In an announcement released today, the New Haven, Conn.-based institution estimated that spending from the endowment – its largest source of revenue – is projected to be $1.2 billion for the 2016 fiscal year. That represents about a third of net revenues. Approximately a quarter of endowment spending is specified by donors to support professorships and teaching and almost a fifth to scholarships, fellowships and prizes.

Distributions to the operating budget have nearly doubled in the last 10 years, according to the university, with annualized increase in endowment spending of 6.4 percent.

The endowment has grown from $23.9 billion the previous year, from $15.2 billion a decade ago, and from $4 billion in the last 20 years ago. The endowment returned 10 percent per annum over the 10 years ending June 30, compared with an estimated 6.6 percent average return of college and university endowments. Over the last 20 years, the endowment generated returns of 13.7 percent per year, compared to the average 8.5 percent return of college and university endowments.

Yale’s endowment also beat the broader market, including domestic stocks, which returned 8.2 percent, and domestic bonds, which returned 4.4 percent annually.

The 10-year asset class performance outpaced composite benchmarks in both domestic equities, 12.3 percent versus 4.1 percent, and foreign equities, 17.4 percent versus 8.4 percent. Venture capital provided the highest return among other asset classes, at 18 percent, followed by leveraged buyouts, 13.4 percent; natural resources, 10.5 percent; absolute return, 7.2 percent, and real estate, 6.2 percent.

Absolute return makes up the largest part of the endowment’s portfolio, at 21.5 percent, followed by leveraged buyouts, 16 percent; foreign equity, 14.5 percent; venture capital, 14 percent; real estate, 13 percent; natural resources, 8.5 percent; bonds and cash, 8.5 percent, and domestic equity, 4 percent.

The endowment is overseen by the Yale Corporation Investment Committee.