Yale fund hits record $27.2B
NEW HAVEN — Yale University’s endowment reached a record $27.2 billion for the year ending June 30, based on an 11.3 percent return, the university reported Tuesday.
While the fund’s growth fell short of the stock market’s performance for the year, it reflects the philosophy of Yale’s chief investment officer, David F. Swensen, to invest in private equity, real estate and venture capital rather than publicly traded stocks, said Charles Skorina, a San Francisco-based recruiter who recruits chief investment officers.
“You cannot create a portfolio for all seasons. You have to make a commitment to a structure, which David Swensen has done,” said Skorina, managing partner of Charles Skorina & Co. “They can pick excellent private equity and venture capital managers and over time this will produce abovemarket returns.
“The problem is that there will be times when the public markets will roar and last year they roared,” Skorina said. Yale’s 11.3 percent return was short of the 15.46 percent that the Standard & Poor’s 500 index rose over the same period, he said.
The endowment increased 7 percent from the fiscal 2016 total of $25.4 billion. Yale’s previous record was in fiscal 2015, with a total of $25.6 billion. The university’s endowment grew only 3.4 percent that year.
Harvard has the nation’s largest university endowment, at $37.1 billion as of June 30, according to the university. Its return was 8.1 percent.
Skorina listed the top-perform-
ing endowments as Grinnell College, at 18.8 percent, Tulane University at 15.6 percent, Michigan State University at 15.4 percent and the University of California Regents at 15.1 percent.
Skorina said. “Because of the philosophy behind the Yale endowment and because of the way the Yale endowment is structured, they’re not going to capture all of the upside in a roaring bull market.” However, “seven out of 10 years they’re going to knock the ball out of the park.”
According to a press release issued Tuesday, Yale plans to spend $1.3 billion from the endowment, 34 percent of total revenues, much of that on financial aid that Yale says meets “the full financial need of every student enrolled in Yale College.”
Yale’s endowment has returned an average of 12.1 percent over the last 20 years, according to the press release, while its spending has grown an average 9.2 percent.
A breakdown of Yale’s portfolio shows the following returns: absolute return, 25 percent; venture capital, 17 percent; foreign equity, 15.5 percent; leveraged buyouts, 14 percent; real estate, 10 percent; bonds and cash, 7.5 percent; natural resources, 7 percent; and domestic equity, 4 percent.