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Endowment reaches record high of $4.2 billion

12.4 percent return surpasses Dartmouth, Harvard, Penn

By
University News Editor
Monday, September 30, 2019

The University’s endowment grew to a record high $4.2 billion with $467 million in investment gains for the 2019 fiscal year, according to documents from the Investment Office. 

In FY 2019, the endowment had a return of 12.4 percent, which more than doubled its aggregate benchmark of 5.8 percent. Vice President and Chief Investment Officer Jane Dietze called the return “excellent” in an email to The Herald.

Members of the Investment Office characterized FY 2019 as volatile. “FY19 really showed how resilient to risk our portfolio is,” wrote Chief Executive Officer Joseph Dowling III in an email to The Herald. “In both major stock market draw-downs in December and May we significantly outperformed.” 

“The critical factor in the endowment’s investment performance was protecting capital during two substantial declines in the stock market,” Dietze wrote.

The University outperformed peer top quartile and peer median returns over one-, three-, five- and ten-year periods, according to data from Cambridge Associates. This year’s 12.4 percent return more than doubles the peer top quartile and peer median return rates of 5.9 and 4.9 percent, respectively. 

So far, only three other Ivy League universities have publicly released their endowment return. The University’s endowment return outperformed Dartmouth, Harvard and Penn, which returned 7.5 percent, 6.5 percent and 6.5 percent, respectively. 

The endowment serves as an “essential financial resource for Brown’s educational mission,” Dietze wrote. It finances various University expenditures including scholarships, professorships, centers, libraries, athletics and student support, instruction and lectures, according to the documents. 

The endowment currently supports 14 percent of the University’s annual operating budget. In FY 2019, it distributed $165 million to the University, or around $16,000 per student, according to the documents. The endowment also received $98 million in gifts. “The Investment Office is focused on protecting and growing that resource for generations to come,” Dietza added. 

“The endowment is not invested to optimize the performance in a single year,” Dietze said. Rather, “it is invested to generate strong risk-adjusted returns over the long term, and to be adaptable to macroeconomic scenarios.”

The University’s endowment return exceeded the 10.4 percent return of the S&P 500 Index, which was slightly above average historical returns, according to the document. The S&P 500 index is used as a measure of the U.S. stock market performance. Thirty-seven percent of the endowment was invested in absolute return strategies, 27 percent in private equity, 21 percent in public equity and 4 percent in real assets, according to the documents. Similar to FY 2018, 71 percent of endowment assets were invested in North America.

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