Predicting Fiscal Year 2019 Endowment Performance: Ivies to Beat Larger Schools but Lag 60-40

Months prior to all endowments turning in their fiscal year 2019 grades, or returns, it is possible to estimate how the average endowment performed with a significant degree of accuracy. It is also possible to project FY2019 performance of smaller groups of endowments, like the much-watched and imitated Ivies, as well as individual systems, such as Yale.

Through the use of advanced quantitative tools and techniques – like those used to analyze and monitor illiquid investment strategies that report infrequently without significant transparency, such as hedge funds and, increasingly, private equity, venture capital and real estate – endowments, foundations and OCIOs can better understand the factors driving the performance and risk of their portfolios, and that of their peers.

First, let’s review how major asset classes common to endowment portfolios performed in FY2019. The 12-month period ending in June was a good year for private markets[1], U.S. equity and fixed income. International equities (foreign developed and emerging markets), hedge funds (which most larger endowments have significant exposure to) performed poorly, and natural resources were the only negative returning asset class.