“The Duke Endowment’s 2018 returns also beat the 8.4 percent gains that a typical 60-40 portfolio of S&P 500 stocks and aggregate bond index investment grade bonds would have returned in fiscal year 2018, according to Markov Processes International. The endowment’s growth also surpassed the S&P 500’s 10.8 percent growth over the same period.” Read the full article here.
“This year’s gains were driven by alternative investment strategies. Ivy League asset managers have been ramping up allocations to alternative asset classes in recent years in hopes of outperforming broad market indexes. “What we definitely see is that the funds that were highly exposed to private equity and venture capital did very well,” said Jeff Schwartz, president at MPI.” Read the full article here.
“According to investment research analysts Markov Processes International, the strong performance has been driven in large part by investments in private equity and venture capital, which have returned 18.7% and 18.3%, respectively, in fiscal 2018, compared to a 14.4% return for the S&P 500…. Markov estimated that private equity and venture capital contributed 8.3% and 3.3% of Yale’s 12.3% return for 2018, with other asset classes contributing only 0.8% of its annual return. The firm also estimated that private equity and venture capital contributed 5.2% and 3.2%, respectively, of Dartmouth’s 12.2% return; and 3.6% and 3.3%, respectively, of Harvard’s 10% return.” Read the full article here.
“Harvard’s returns topped the 8.4 percent gain that a typical 60-40 portfolio of Standard & Poor’s 500-stock and aggregate bond index equities would have delivered over the same period, said Jeff Schwartz, president of Markov Processes International, a quantitative research and technology firm. But the endowment at the Massachusetts Institute of Technology, for example, posted a 13.5 percent gain, bringing it to $16.4 billion; Notre Dame’s increased 12.2 percent, to $13.1 billion; and the University of Pennsylvania’s rose 12.9 percent, to $13.8 billion.” Read the full article here. (subscription required)
“Despite having the second-smallest endowment in the Ivy League next to Brown University, Dartmouth has had among the top-performing investment portfolios of any of the elite universities in recent years. According to investment research firm Markov Processes International, Dartmouth has been among the top-four performing Ivy League endowments five out of the previous six years.” Read full article here.
“MPI has evaluated endowment returns using its patented process, called “Dynamic Style Analysis,” which was designed to model the behavior of otherwise secretive investments such as hedge funds or university portfolios,” explains Julie Segal of Institutional Investor. “The annual results of Yale and the Ivy League colleges and universities, which have huge commitments to private investments, are closely watched by the industry.” Read the full article here.
“Even Harvard and Yale, which have expert teams of academics and Wall Street managers overseeing their multibillion endowments, have been unable to do much better over time than a simple blend of index funds,” says Ian McGugan of The Globe and Mail. “In fact, an utterly standard index fund blend of 60% stocks and 40% bonds would have outpaced the returns most Ivy League endowments have achieved over the past decade…according to a recent report by Markov Processes International, an investment research firm (subscription required to read article). Read the MPI report here.
It is generally known that endowments invest in risky assets, but quantifying such risks has remained challenging due to a lack of information about returns. We set out to address this challenge and developed a new basis for estimating endowment risks.
“We’re talking about true believers in the value of alternatives,” MPI President, Jeff Schwartz, tells the New York Times Columnist James B. Stewart. “It’s hard to take an embedded belief system like that and say, just because we’ve had an outstanding bull market, that you should move to 60-40.” Read our full 2017 Ivy League endowment performance report.
“Only Princeton and Columbia have managed to beat a 60/40 portfolio (since 2007), even though it started just before one of the worst crashes for public equities in history. Yale has almost matched it–but it went to far more trouble than it would have taken just to put the endowment’s money into conventional public assets,” writes the FT‘s John Authers in his latest article looking at Ivy League endowment returns, which cites our FY 2017 report.