Nonprofit healthcare organizations reported an average return of 13.2 percent net-of-fees on investable assets during 2017 compared to 6.2 percent on average for 2016.
According to the Commonfund Institute, the 56 funds surveyed reported an average investable asset pool of $2.1 billion as of December 31, 2017, and median investable assets of $987 million. Investable assets include endowment/foundation funds, funded depreciation, working capital and other separately treated assets.
The health-related funds averaged 5.9 percent returns for the trailing three-year period ending December 30, 2017 and 6.9 percent for the trailing five-year period. The 10-year period was the least at 4.6 percent. The benchmark is the consumer price index plus five percent, according to Commonfund Institute.
Allocations in 2017 to U.S. equities and fixed income were more than they were in 2015 but remain well below the upper 30 percent/lower 40 percent level reported when the study commenced for 2002.
At year-end 2017, 57 percent of participating institutions’ U.S. equities allocation was actively managed and 43 percent was passively managed — a clear change since 2014 when the active/passive split was 65/35, according to Commonfund Institute. This might reinforce observations in earlier studies concerning the shift to passive management of highly efficient asset classes, such as U.S. equities. The allocation to actively managed non-U.S. equities also declined.