Yale fund hits record $27.2B

New Haven Register (New Haven, CT) - - FRONT PAGE - By Ed Stan­nard

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.

Newspapers in English

Newspapers from USA

© PressReader. All rights reserved.