The endowments of four hundred and sixty-one U.S. colleges and universities returned an average of 11.7 percent, net of fees, in the fiscal year that ended June 30, 2013, up markedly from the previous year's return of -0.3 percent, a report from the finds.
Preliminary data for the 2013 NACUBO-Commonfund Study of Endowments, which is conducted in partnership with the , suggest that endowments with assets between $501 million and $1 billion averaged returns of 12.7 percent in fiscal year 2013, while those with assets under $500 million and in excess of $1 billion averaged returns ranging from 11.2 percent to 11.8 percent. Among a smaller sample of 206 institutions that have completed the NCSE survey, endowments with assets under $25 million reported the highest average three-year return, at 11.0 percent; those with assets between $25 million and $50 million reported the highest average five-year return, at 5.5 percent; and those with assets over $1 billion generated the highest average ten-year return, at 8.5 percent. While additional data remains to be collected, the survey found that 50 percent of participating institutions reported an increase in gifts and that 30 percent reported a drop.
After years of increases in allocations to alternative investment strategies — including hedge funds and derivatives, private equity, global venture capital, distressed debt, and private equity real estate — the report found that in FY2013 the average allocation to alternative investment strategies fell to 47 percent of participating institutions' portfolios, from 54 percent the previous year. In contrast, the average allocation to domestic equities grew to 20 percent, up from 15 percent, while the average allocation to international equities increased to 19 percent, from 16 percent. The average allocation to fixed income investments remained unchanged at 11 percent, while the allocation to short-term securities/cash/other fell slightly to 3 percent, from 4 percent in FY2012.
"The data concerning alternative strategies will bear watching as more colleges and universities report their FY2013 results," said NACUBO president and CEO John D. Walda and Commonfund Institute executive director John S. Griswold in a joint statement. "A number of factors are at work here. Colleges and universities may be shifting some assets into more liquid strategies, but because domestic and international equities were the two best performing asset classes in FY2013, some of the shift may have been the result of market action."