University Endowment Returns

Joe Asch has an interesting analysis of returns on university endowments over time (focusing on Dartmouth but comparing Dartmouth to over Ivy League institutions), comparing the returns of actively-managed endowments with those with a simple 60/40 equity-bond split. He notes that while actively-managed endowments beat the benchmark for the past year over the past five years it hasn’t done so well comparatively:

However, over a five-year span, despite active management by Trustees and the College’s investment staff, we underperformed a 60/40 equities/bond allocation by 1.8% annually. The only major endowment to beat the 60/40 allocation was Columbia, and its performance was only 0.6% annually above that of a plain vanilla strategy.

He also notes that Ivy League universities pay their chief investment officers annual salaries ranging from $673k at Cornell to over $5 million at Harvard.

The underlying analysis that Joe excerpts is here.