Big University Endowments Hampered by Startup Write-Downs

The hangover from the bursting of the startup bubble is weighing on big U.S. university endowments, with write-downs in their growth and venture-capital investments driving a second straight year of weak returns. From a report: The Massachusetts Institute of Technology reported a loss of 2.9% and Duke University, a loss of 1% for the fiscal year ending June 30, while endowments at Yale and Stanford gained 1.8% and 4.4%, respectively. The median return for endowments and foundations of more than $1 billion was 5.6%, according to a preliminary estimate from Cambridge Associates. That was well behind the overall stock market. The MSCI All Country World Index and the S&P 500 gained 17.1% and 19.6% for the period, including dividends, respectively. They were boosted by the rally in tech giants including Microsoft and Nvidia that have benefited from developments in artificial intelligence. Small endowments of less than $500 million, which typically have less exposure to private investments and more to public equities, had a median return of 8.8%, according to Cambridge. "You were at the mercy of portfolio construction," said Matt Bank of Charlotte, N.C.-based Global Endowment Management, an outsourced investment firm. "Those decisions drove your short-term results, and the specific decisions you made within categories mattered less." Exposure to China also had a negative impact on returns, several endowment chiefs said.

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