The strong performance in fiscal year 2007 contributed to an 8.6% average 10-year compounded rate of return, according to a press release on the survey. The figure is in line with the target needed to meet short-term and long-term institutional spending goals and ensure the financial stability of colleges and universities, the release said.
The study found non-U.S. Equity was the asset class posting the highest average return for the year at 28.3%. Private equity generated an average return of 19.8%, followed closely by U.S. Equity at 19.3%.
College and university endowments allocated the bulk of their assets to equities in fiscal year 2007 (57.6%). Fixed income vehicles held 18.6% of assets on average, and hedge funds held 10.6%.
“This year’s survey shows a steady movement out of U.S. fixed income and U.S. equity and into non-U.S. equity over the past five years,” said Brett Hammond, chief investment strategist, TIAA-CREF, in the press release. “I think this suggests that endowments of all sizes are becoming increasingly comfortable with the idea of no longer being U.S.-centric with their investments, and we anticipate that this represents a long-term strategy.”
An executive summary of the 2007 NACUBO Endowment Study and the complete study are available for download at www.nacubo.org .