Vivek Suri

Yale’s endowment posted a return of 12.3 percent over the last fiscal year that ended on June 30, 2018 the Investments Office announced Monday.

The University’s endowment is now valued at a record $29.4 billion — a $2.2 billion increase from last year’s previous record of $27.2 billion. Yale’s Investments Office has traditionally been the top performer among its peer institutions. Though most of Yale’s competitors have not yet released their annual statistics, Yale fell slightly short of MIT’s 13.5 percent return rate, but surpassed Harvard’s 10 percent return this fiscal year. Endowment statistics from other universities are slated for release later this month.

Experts and administrators interviewed by the News were optimistic about Yale’s robust returns.

Praising the work of the Investments Office, Provost Ben Polak wrote in an email to the News that the year’s annual growth was a “fantastic result.”

Roger Ibbotson, a professor of finance at the School of Management, added that despite fluctuations over the years — last year, Yale’s return was 11.3 percent, lagging behind MIT, Princeton, and Stanford’s results — “[the endowment] has done very well in the long run, and that’s all that matters … Yale cannot win all the time.”

Over the past ten years, Yale’s endowment has returned an average of 7.4 percent per year, comfortably above the estimated 5.5 percent average return of university endowments, according to a University press release. During the past decade, Yale’s endowment — the world’s second largest university endowment — has grown from $22.9 billion to $29.4 billion.

Charles Skorina, an investment executive recruiter, said that Yale’s performance remains strong. He added that it has become increasingly more difficult for the University to outperform its peers to the same extent that it has in previous years.

“The game has changed,” Skorina said. “Swensen has been tremendously successful and has had a strong endowment performance. He supervised many of the Chief Investment Officers that are now in charge of the endowments at other major Universities. But they have adopted his style, so there is a lot more competition.”

The chief investment officers at Princeton, Stanford and MIT all worked at the Yale Investments Office under the supervision of Swensen and Senior Director of the Investments Office, Dean Takahashi, before taking their current positions.

Yale invests heavily in private markets — private equity and venture capital — which, though less volatile than the daily fluctuations of the stock market, prevented the endowment from reaping the benefits of a stock market which reached record peaks earlier this year, Skorina added. Experts and academics from Yale used the same argument to justify Yale’s relatively weak endowment returns last year.

The Standard & Poor’s 500 index, an index of the market capitalizations of 500 large companies on the stock market and, in part, a measure of the strength of the stock market, returned 14.37 percent last fiscal year, more than 2 percentage points above Yale’s return.

But as the endowment continues to grow, so does its contribution to the University’s operating budget. Spending from the endowment, which is the University’s largest source of revenue, is projected to be $1.4 billion in 2019, according to the press release.

In March 2015, the University announced that it would name the Hall of Graduate Studies’ tower in honor of Swensen, who has been at the helm of Yale’s Investments Office for 32 years.

Lorenzo Arvanitis | lorenzo.arvanitis@yale.edu

Correction: A previous version of this article incorrectly compared Yale’s 2018 returns with Princeton and Stanford’s 2017 returns. In fact, these universities have not yet released their annual statistics. The article has been updated to compare the statistics from the correct years and to address the fact that many of Yale’s competitors have not yet reported their return rates for this past fiscal year.