The NACUBO and Commonfund people do great work putting out annual statistics on endowments in their NCSE studies. But they only report investment returns for statistical aggregates and those don't tell the whole story.
Our analysis of mid-sized endowments reveals that, although it's good to be big, it's not decisive for investment performance. In fact, some of these mid-sized overachievers produced industry-leading returns.
The NCSE tables tell us that big endowments (in excess of $1 billion) had mean five-year returns of 1.7%, while midsize endowments ($500 million to $1 billion) earned only 1.2%.
But, if we combine and rank the performance of the midsize endowments and large endowments (See: The Ivys and Alt-Ivys: A post-season look at performance, pay, and pitfalls), 13 of the top 20 are in the mid-sized bracket and Penn, Yale, Brown and Harvard, among others would not have made the cut.
The two tables below rank the highest performing midsized endowments by their three- and five-year returns. We even include some of those famous Ivy schools for reference, so you can see how our midsize over-achievers compare to the big guys.
Further along, we reveal how much these high-achievers are paid for their efforts.
We recruit chief investment officers and senior asset managers, so we focus on the individuals and teams responsible for the investment process. The chief investment officer (or director of investments) listed is the current incumbent. If there has been recent turnover, we say so in the footnotes. If the school is committee-led, we also (in most cases) note the current chair of the investment committee. We also note the schools who have chosen to outsource and to whom. This is another real option for a fund of this size.
The $500 million to $1 billion bracket is interesting to us because this is a transition zone for the endowment management model. Most schools above $1 billion have a CIO and a professionally staffed investment office. Most schools under $500 million do not. The latter mostly rely on volunteer investment committees and outside consultants.
In this bracket the economics of setting up an investment office can often be argued one way or the other depending on specific institutional needs. We see a mixture of management models.
In some cases we see a sort of hybrid: Endowments who have hired a director of investments (DOI or similar title) as a full-time, on-site manager to coordinate the investment program. The DOI usually does not have the same credentials and experience as a typical full-bore CIO (nor the same authority or compensation), but there are exceptions to that as well. We'll have more to say about that below.
More learned commentary follows; but now on to the stats:
Top 20 Midsize Endowments, Five-Year Annualized Returns (2008-2012):
NB: All returns are for fiscal years ending 30 June, except: Colgate U, Trinity U, and Macalester College, all ending 31 May.
CIOs appointed after Jul 2007: 02 Gorrilla, Adele N.: Oct 2008 - Present Succeeded Michael Horst (DOI): July 2007 - Oct 2008 07 Perry, Mansco: Oct 2010 - Present Predecessor: Craig Aase: July 2007 - Oct 2010. 13 O'Donnell, Hugh: Aug 2012 - Present Predecessor: Douglas E. Reinhardt: July 2007 – Aug 2012