Yale University’s endowment recorded a 1.8% investment gain in the year ended in June, the 14th straight increase for the second-wealthiest private college in the US.
(Bloomberg) — Yale University’s endowment recorded a 1.8% investment gain in the year ended in June, the 14th straight increase for the second-wealthiest private college in the US.
The fund posted $759 million in investment gains during the period, Yale said in a statement Tuesday. The endowment’s value declined to $40.7 billion after accounting for $1.8 billion in distributions to the university’s operating budget.
Yale’s performance bucked recent investment losses at schools such as Duke University and the Massachusetts Institute of Technology at a time when the richest colleges have trailed smaller institutions despite often having more sophisticated operations. Larger endowments typically invest more in venture capital and hedge funds, while smaller funds tend to favor US equities. The S&P 500 gained 18% in the 12 months through June.
The median return for endowments larger than $500 million was 6.2% in the 12 months through June, compared with 10% for funds smaller than $500 million, according to Wilshire Trust Universe Comparison Service, which doesn’t name individual schools.
The latest year’s gains were eroded by inflation.
MIT reported a 2.9% decline in its investments Oct. 6, citing “retrenchment in the valuations of venture capital portfolio companies.” Private equity and venture capital firms started writing down some of their investments over the last year, hitting endowments that had invested heavily in them.
Yale didn’t provide information on its asset allocation or how each asset class performed. The endowment has been led by Chief Investment Officer Matthew Mendelsohn since 2021, when he took the reins after the death of his legendary predecessor, David Swensen. Swensen was the pioneer of the investment strategy that steered the school into alternative assets and away from plain vanilla stocks and bonds.
Colleges use money from investment returns to pay for professor salaries, offer financial aid and handle other costs.
Spending from Yale’s endowment provides the largest source of revenue for the New Haven, Connecticut-based university. The overall endowment value declined but was aided by fundraising, almost $300 million in gifts.
University endowment returns in recent years have been uneven. Last year, endowments posted a median 10.2% loss, the biggest decline since 2009, following a year in which they posted the best results since the 1980s. Yale last year was the only member of the Ivy League group of eight colleges to post positive gains, albeit less than 1%. In 2021, Yale’s investments gained about 40%.
(Updates with fundraising amount in the ninth paragraph)
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