Measuring the Ivy 2017: A Year in the Upside Down for Endowment Returns
In stark contrast to FY 2016, this past year was a strong one for most endowments. In fact, nearly all the Ivy League endowments, Harvard being the only exception, beat the 60-40 portfolio, a commonly cited benchmark that endowments measure their performance against.
- While stranger things have happened, this year’s big winners and the factor exposures that drove their returns were certainly atypical.
- Overall, the Ivies reversed the disappointing results of FY 2016, with all registering positive returns and all but Harvard beating the 60-40 portfolio (only the second time that’s happened since 2009).
- Traditional under-performers outperformed, while traditional outperformers posted more moderate returns.
- Public equity markets rallied strongly, beating private equity markets and boosting Ivy endowment returns.
- Harvard claims bottom performer status for the fourth time in six years and showed large negative unexplained returns (reportedly due, in part, to significant markdowns in its natural resources holdings).
- Endowments’ continued increase in exposures to illiquid investments, a move toward the Yale model of a high-risk, high-return portfolio, appeared to deliver no meaningful benefits in 2017.
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