While Yale posted a return of 4.7 percent on its investments during the latest fiscal year, the value of the endowment dropped by $100 million due to spending distributions.
Yale’s endowment performance, which leaves it at $19.3 billion as of June 30, is significantly weaker than the 21.9 percent return it posted in fiscal year 2011 but exceeds the returns registered at two other Ivy League schools so far this year. While the University of Pennsylvania posted earnings of 1.6 percent last week, Harvard University announced yesterday that its investments had experienced a 0.05 percent loss during fiscal year 2012.
“Thanks to the outstanding work of the Investments Office, Yale has derived maximum benefit from the generosity of its donors during challenging economic times," University President Richard Levin said in a statement released today.
Under a model pioneered by Chief Investment Officer David Swensen, Yale's endowment continues to favor alternative, illiquid assets such as private equity and real estate, which are targeted to make up roughly 35 percent and 22 percent of the endowment this fiscal year, respectively. Foreign equity, which is expected to make up 8 percent of the endowment, faced a particularly difficult fiscal year 2012, the statement notes: developed markets lost 13.8 percent and emerging markets fell 15.9 percent.
The latest fiscal period is the first year the endowment has declined since it lost nearly a quarter of its value in fiscal year 2009 following the onset of the nationwide economic recession. In fiscal year 2010, the endowment posted an 8.9 percent return — the worst in the Ivy League — but the strong performance in fiscal year 2011 was in line with the dramatic growth the endowment experienced during the “boom years” of the mid 2000s.
Yale has returned an annual average of 10.6 on its investments over the past decade. Spending from the endowment is expected to amount to just over a $1 billion this fiscal year, accounting for roughly 36 percent of the University’s revenue, according to today’s statement.
Paul D. Keane, The Anti-Yale