Preliminary Data Show Educational Endowments’ Investment Returns Averaged 15.8 Percent in FY2014

(Press release, Nov. 3, 2014) — Preliminary data gathered from 426 U.S. colleges and universities for the 2014 NACUBO-Commonfund Study of Endowments® (NCSE) indicate that these institutions' endowments returned an average of 15.8 percent (net of fees) for the 2014 fiscal year (July 1, 2013 - June 30, 2014). The early return data build on the 11.7 percent average return reported by study participants for FY2013.

The data are broken down into six categories according to size of endowment, ranging from institutions with endowment assets under $25 million to those with assets in excess of $1 billion. Larger endowments posted the highest returns for the fiscal year, as institutions with assets over $1 billion reported an average return of 16.8 percent and those with assets between $501 million and $1 billion reported an average return of 16.2 percent. Close behind, however, were the smallest participating institutions, those with assets under $25 million, whose returns averaged 16.1 percent. Returns for the other three size cohorts fell into a tight range of 15.3 percent to 15.6 percent. All returns are net of fees.

The annual NCSE analyzes return data and a broad range of related information gathered from a nationwide cross section of U.S. colleges and universities, both public and private, as well as their supporting foundations. The size and scope of the study make it the most comprehensive annual report on the investment management and governance practices and policies of institutions of higher education across the U.S. Eight hundred thirty-five colleges and universities participated in last year's study; it is anticipated that the FY2014 study will be about the same size by the time all data are gathered, analyzed and published in January 2015.

Average Annual Returns for Three, Five, and Ten Years

Additional findings based on preliminary data — drawn from a smaller sample of 129 institutions — show that participating institutions' trailing three-year average annual returns averaged 8.9 percent; trailing five-year annual returns averaged 11.7 percent; and trailing 10-year returns averaged 7.0 percent. The largest endowments reported the highest returns for the trailing three- and 10-year periods, and lagged the highest five-year return by just 10 basis points.