Strong public markets and positive private asset performance helped drive Columbia University’s endowment to return 11.5 percent for the fiscal year ended June 30 and grow the portfolio’s value to $14.8 billion. By comparison, the New York-based endowment posted a 4.7 percent return for fiscal year 2023.
The endowment “benefitted both from our exposure to public markets and from strong performance of individual managers relative to benchmarks,” said Kim Lew, president and CEO of Columbia University Investment Management Company, which manages the endowment’s assets. “While private assets lagged our marketable assets portfolio, it contributed positive performance in the past year,” she added in a statement.
Lew also noted that the endowment office is implementing “a deliberately paced re-positioning of the private portfolio, and we are optimistic that the current market cycle presents investment opportunities that will benefit performance in the long term.”
Lew did not immediately return a phone call requesting additional information.
Michael Markov, founder and chairman of Markov Processes International, said that MPI projects Columbia’s fiscal year return “to sit at or just under the top of the class of Ivy League endowments—and a slightly broader set of elite schools including Stanford and MIT” (which he describes as “elite endowments”). He added that MPI expects an average return between 9 percent and 10.5 percent for fiscal 2024 for elite endowments.
“Columbia likely benefited from its domestic equity exposure, which is amongst the highest in the Ivies especially when considering additional exposure to stocks within its large hedge fund portfolio, as well as its relatively low exposure to private equity, specifically venture capital,” Markov said in an emailed response to questions. “We estimate Columbia’s venture capital exposure to be the lowest of the elite schools.”
Markov noted that after such a strong year for public equity, MPI doesn’t expect any elite school following the Yale model to beat the 14.20 percent return of a global 70/30 portfolio (70 percent ACWI/ 30 percent Bloomberg US Aggregate Bond Index).
As MPI covered in its pensions return projections, fiscal year 2024 was defined by the outperformance of U.S. stocks. Markov noted that venture capital detracted most from performance, with a -4.6 percent loss, followed by real estate, losing -4.2 percent. He added that private equity returned 6.5 percent in FY 2024, similar to performance in previous years.
Stephen Nesbitt, CEO of Cliffwater, told Institutional Investor that in this past fiscal year there were “only two things that mattered” when it came to university endowment performance: how much did they have in U.S. versus non-U.S. assets, and how much venture did they have?
“U.S. assets did well, while non-U.S. did mediocre to poor,” Nesbitt said, adding “Venture generally did not do well over the last year, and those overweighted venture and overweighted non-U.S. stocks are those that are going to lag over the last fiscal year. So, it’s really that simple.”
While other Ivy league endowments such as Harvard, Princeton and Yale have yet to release their fiscal year 2024 figures, Columbia’s endowment has so far outperformed that of Dartmouth’s (which returned 8 percent). When comparing to other universities that have released their annual figures, Columbia’s fiscal year return is similar to that of the University of Missouri and University of Washington endowments, both of which returned 11.3 percent for their fiscal years.
Additionally, Columbia outperformed such university endowments as the University of Houston’s (which returned 9.6 percent), the University of Illinois System’s (9.4 percent), the University of Colorado Foundation’s (8.7 percent) and the University of Virginia’s (7.5 percent).
However, Columbia lagged the performance of the University of Minnesota Foundation, which posted a 13.4 percent return for its fiscal year.
Columbia’s trailing five- and 10-year returns are 8.5 percent and 7.4 percent, respectively.
