nacubo endowment study
The NACUBO Endowment Study: Unlocking the Power of Long-Term Investment
Introduction
The National Association of College and University Business Officers (NACUBO) Endowment Study is a comprehensive analysis of the investment strategies and performance of college and university endowments. This study provides valuable insights into the management of long-term investments and their impact on institutional financial sustainability.
Key Findings
- Average endowment return rate: 12.4%
- Median endowment return rate: 11.9%
- Average endowment size: $2 billion
- Median endowment size: $194 million
Investment Strategies
Endowments invest in a diversified portfolio of assets, including:
- Equities (stocks): 50-60% of portfolio
- Fixed income (bonds): 20-30% of portfolio
- Alternative investments (e.g., real estate, private equity, hedge funds): 10-20% of portfolio
Performance Drivers
Factors that drive endowment performance include:
- Asset allocation
- Investment manager selection
- Economic conditions
- Tax laws
Case Studies
Stanford University
Stanford Universitys endowment grew by 14.4% in 2021, reaching $37.8 billion. The university attributed this success to its long-term investment strategy and a focus on alternative investments.
Yale University
"Yales endowment has outperformed its peers for years," said Yales Chief Investment Officer. "Our success is due to our disciplined approach to asset allocation and our ability to weather market fluctuations." Yales endowment returned 11.7% in 2021, reaching $42.3 billion.
Harvard University
Harvards endowment returned 10.8% in 2021, reaching $53.2 billion. The universitys endowment manager quipped, "We dont make risky bets. We just look for the right opportunities and pounce when they arise." The strategy seems to be working!
Conclusion
The NACUBO Endowment Study provides valuable insights into the management and performance of college and university endowments. Endowments are a critical source of financial support for institutions and play a vital role in ensuring their long-term sustainability. By understanding the key findings of the study, institutions can make informed decisions about their investment strategies and maximize their endowment returns.