The news is not so good for University of California. With almost $11 billion on the line, their endowment (run by a patchwork of separate campus foundations, plus the central UC Regents Treasurer’s office) managed to lose millions of dollars in a year when the stock market did pretty well. With the legislature already pinching state support for UC in recent years, this couldn’t have been welcome news in Sacramento. More about UC further along.
Five-year Returns: The No-excuses Rankings:
Any given portfolio in any given year can take a bad (or good) bounce; ask anyone who runs one.
For our purposes, we think five-year investment return is the Goldilocks number. Because we’re in the executive search business, we want a number that can (usually) be attributed to identifiable individuals. Most fund managers don’t have the longevity of Warren Buffett. Our research suggests that average tenure among endowment chief investment officers and senior staff is, coincidentally, about five years.
Here are returns for our 12 Public Ivys over the eventful half-decade FY 2008 through FY 2012:
12 largest public university endowments Investment return ranking: Five-year returns 2008-2012:
Again, team UVIMCO at University of Virginia leads, and by a good margin, with an annualized five-year return of 4.7%. For comparison, the NACUBO number for all large endowments, public and private, was just 1.7%; and the weighted average among our twelve Public Ivys was 1.9%.
And look at that annualized CPI inflation over this period: 2.3%. Deflate those nominal returns for inflation and there are only a few positive real returns. This should be worrisome for any endowment investor who, above all, wants to preserve the purchasing power of the corpus.
UVIMCO’s return wasn’t just good for a public college; it was good, period. Only a hair lower than Columbia University’s 4.9%, which led the Private Ivys. Kochard’s team out-invested every other traditional Ivy endowment in the period, including much bigger funds at Harvard, Yale and Princeton. Taking all 24 schools together, Virginia ranked 2nd out of 24. Not bad at all. Thomas Jefferson would be pleased.
For most of this period Christopher Brightman was president and CIO of UVIMCO. Although he left Charlottesville in 2012, most of that performance was under his aegis, so he and his team deserve recognition for their excellent performance.