Endowments Suffer Average Net Loss of 19% in FY 2009

December 10, 2009 (PLANSPONSOR.com) – Preliminary data gathered from colleges and universities participating in the 2009 NACUBO-Commonfund Study of Endowments (NCSE) indicate that their endowments and foundations had an average investment return of -19% (net of fees) for the 2009 fiscal year.

A news release said the funds had a preliminary 10-year average net return of 4.2%.

National Association of College and University Business Officers (NACUBO) President and Chief Executive Officer John D. Walda and Commonfund Institute Executive Director John S. Griswold jointly noted that while FY 2009’s preliminary total returns are disappointing in absolute terms, they mark an improvement over returns from the first half of the fiscal year.

A survey of the returns realized by 435 educational endowments from July 1, 2008, through November 30, 2008, showed investment returns of -22.5%, exacerbating single-digit losses experienced by educational endowments in FY2008.

“We do not minimize the pain that most educational institutions have suffered in the global financial crisis and economic downturn; however we are encouraged by the markets’ rebound beginning in early March 2009,” said Walda, in the news release.

Additional preliminary data from the 2009 survey indicate that participating institutions’ asset allocation as of June 30, 2009, was:

  • Domestic equities: 19%
  • Fixed income: 13%
  • International equities: 12%
  • Alternative strategies: 51%
  • Short-term securities/cash/other: 5%

Additional preliminary survey findings indicate that the 504 institutions to have reported so far spent from their endowments at an annual rate of 43 % in FY2009, roughly the same as in FY2008. The preliminary data also indicate a median debt level among participating institutions of $43.3 million.