By David G. Barry
Will Princeton
University join Yale University as being the only Ivy League schools
to report a gain for the 2021-22 fiscal year?
That’s the question now that seven of the eight prestigious universities have
announced results.
Princeton, which for the 2020-21 fiscal year produced a 46.9% return, did not announce
its results until October 29, which was the last Friday of the month.
Yale earlier this month announced that it had a gain of 0.8% but that the value
of its endowment declined from $42.3 billion on June 30, 2021, to $41.4 billion
on June 30, 2022. The University of Pennsylvania’s $20.7 billion
endowment posted a 0.0% return while Cornell University’s $9.8 billion
fund reported a negative 1.3% return and Dartmouth College’s $8.1
billion endowment posted a negative 3.1%.
Three more Ivy League schools reported negative returns this week: Harvard
University, Columbia University and Brown University.
They, however, are hardly alone. According to Cambridge Associates, the
preliminary mean and median for colleges and universities are both negative 6%.
Harvard said its endowment had a negative 1.8% return, decreasing from $53.2
billion to $50.9 billion. Included in that figure was a $2.1 billion
distribution to the university’s operating budget. For the 2020-21 fiscal year,
Harvard had a 34% return.
In a letter in Harvard’s annual report, N.P. “Narv” Narvekar, Harvard
Management Co.’s CEO, said the disparity between the two fiscal years “was
stark and reinforces the necessity of focusing on long-term, risk-adjusted
returns.” He said the most significant impact was the “poor performance of
global equity markets.” He also said that while hedge funds and private equity
funds have fared well in recent years, they did not do well against their
benchmarks. Harvard, said Narvekar, also did not benefit from investing in
energy – especially given the university’s commitments to achieving its stated
net zero goals.
Venture capital, buyout and real estate were Harvard’s strongest performers,
but Narvekar said those results may indicate that private managers “have not
yet marked their portfolios to reflect general market conditions.”
As a result, he said Harvard is “cautious about forward-looking returns in
private portfolios” and expects that the end of 2022 “might present meaningful
adjustments to these valuations, as investment managers audit their
portfolios.”
To that end, he said that Harvard is “pleased” that it was able to sell close
to $1 billion of private equity funds in the secondary market in the summer of
2021 – a time of “significant ebullience.”
Columbia University said its endowment returned negative 7.6% and that its
assets now stand at $13.3 billion. In a prepared statement, Kim Lew,
president and CEO of the Columbia University Investment Management Co.,
said the endowment results “were negatively impacted by the dramatic reversal
in the equity markets during the second half of the year.” She said her team is
“actively continuing the work we began over a year ago to reposition the
portfolio, at more reasonable valuations.”
Brown posted a negative 4.6% return, with its endowment decreasing from $6.9
billion to $6.5 billion. It said the drop was due to a $315 million decline in
investment assets, a $207 million contribution to Brown’s operating budget, and
the addition of $133 million in endowed gifts.
The Providence, R.I., school generated a return of 51.5% for the fiscal year
ended June 30, 2021.
In a statement, Jane Dietze, Brown’s vice
president and CIO, said that “while recent years have been rich with
opportunities to grow the Brown endowment, fiscal year 2022 proved to be a
moment when the protection of assets was our paramount goal.”