The University saw a 2.7% return on investments in its endowment in fiscal year 2023, the University’s Investment Office announced Wednesday. With $174 million in returns, in addition to $175 million in endowed gifts, the combined value of the endowment rose to $6.6 billion, an overall change in market value of 1.15%.
The University pulled $257 million — 17% of the total operating budget — from the endowment to support “student scholarship, scientific research and other priorities,” according to a University press release. The Investment Office pulls between 4.5% and 5.5% of endowment funds each year to support the operating budget. After budgetary expenditures, net growth for the past year totaled $92 million.
The gains beat last year’s 4.6% loss, but fall well short of the University’s record yield in FY 2021, when rapid market growth propelled the endowment to a 51.5% return. Over the past five- and ten-year periods, the endowment has averaged 13.3% and 11.3% in investment returns, respectively, putting it “in the top 5% of all endowment peers” for the period.
The Investment Office targets average yearly returns that “maintain and grow” the endowment over time after adjusting for inflation and subtracting payouts to the operating budget, according to the Investment Office’s website.
“The Investment Office does not invest for one year returns but is focused on generating the highest risk-adjusted return over full market cycles,” Vice President and Chief Investment Officer Jane Dietze wrote in an email to The Herald. “It should be expected that some years returns will be lower (like this year) and other years higher, such as the 51.5% return in FY21.”
In the wake of the unprecedented return in FY 2021, the challenge of the Investment Office “has been to sustain those windfall gains, and we’ve done so with a focus on preserving and growing the endowment as a foundational financial resource that will continue to support education and research for generations to come,” Vice President and Chief Investment Officer Jane Dietze said in a University press release.
Returns for the past decade have totaled $4.7 billion, with payouts standing at $1.9 billion in the same period. The endowment value has more than doubled from $3 billion in 2013.
While “the foundation of the (University’s investment) strategy will not change,” Dietze emphasized that the Investment Office remains flexible in responding to changing market conditions. “Interest rates, for example, have moved dramatically in the last year. That type of change can heavily impact the risk and return of specific strategies the Investment Office pursues.”
“The team continues to monitor and research major trends: Energy Transition, Climate Resilience, Deglobalization, Biotechnology (and) Artificial Intelligence,” Dietze added.
Of the eight Ivy League schools, five others — Dartmouth, Columbia, Harvard, the University of Pennsylvania and Yale — have reported endowment returns for FY 2023. Brown has posted the third-highest investment returns so far, behind Columbia’s 4.7% and Harvard’s 2.9%.
Clarification: A previous version of this article referred to the endowment’s 2.9% “return.” This language has been modified to specify that the figure refers to investment returns, not overall growth.
Charlie Clynes is the managing editor of digital content on The Herald's 134th Editorial Board. Previously, he covered University Hall and the Graduate Labor Organization as a University News editor.
