Yale Endowment Posts 11.5% Return as It Reaches $25.6 Billion

Sept 24 Yale University’s investment return was 11.5 percent for the year ended June 30, valuing its endowment at $25.6 billion, according to a report on the university newsletter.

Other elite peers also outdid Harvard: Stanford University reported a 7 percent gain for the year, while the Massachusetts Institute of Technology’s endowment – run by Seth Alexander, a former protege of Yale endowment chief David Swensen – posted a 13.2 percent return.

Revenue from the endowment provides a critical resources for the University and for the 2016 fiscal year, spending from the endowment is projected to be $1.2 billion, accounting for more than a third of the University’s net revenues.

Harvard’s endowment remains the largest in the world.

Bowdoin and MIT have slightly outperformed Yale over a 10-year period. The Ivy League school, based in New Haven, Connecticut, had an annual average return of 10.0 percent over the past 10 years.

William Jarvis, managing director for the Commonfund Institute in Wilton, which serves as an investment manager for nonprofits, tells the New Haven Register (http://bit.ly/1LC7K4n ) that Yale’s 11.5 percent return is among the best in the nation among colleges.

Bonds and cash: 8.5%.

Swensen said that for Yale, last year was a “wonderful year for venture capital”.

Yale’s performance also handily beat numerous industry averages released, including the 3.6 percent median return for endowments with more than $500 million in value, according to an estimate by the Wilshire Trust Universe Comparison Service.

At Yale, the largest percentage of its fund, 21 percent, was invested in absolute return investment. Domestic equities accounted for only 4 percent of the portfolio. The rest of the mix included leverage buyouts at 13.8 percent and foreign stocks at about 14 percent.

Yale did not release performance results by category for a single year. Foreign equities produced returns of 17.4%, surpassing the composite benchmark by 8.4% annually.