The 2013 NACUBO-Commonfund Study of Endowments (NCSE) surveyed 835 US colleges and universities for data on their endowments covering asset allocations, returns, spending patterns, management and staffing and risk management.

In the aggregate, these endowments had assets worth over $448B. Of this, almost $321B was accounted for by just 82 endowments, or less than 10% of the total number of survey participants.

0-survey-assets educational endowments

2013 a sea-change over 2012

A gratifying finding from the survey is that endowments were able to swing from a negative return in 2012 to a solid 11.7% gain in 2013.

Domestic equities were the asset class primarily responsible for this turnaround, generating positive returns of 20.6%. International equities chipped in with returns of 14.6%, alternative strategies contributed 8.3% and unsurprisingly, fixed income was the laggard with a return of a mere 1.7%.

Here is a table that shows the returns by asset class as well as size of educational endowments.

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Returns on longer time frames


The above table reveals that the best return performance by size of endowment was as follows:

  • Annual:  $501M – $1B (12.0%)
  • 3-Year:  Under $25M (10.6%)
  • 5-Year:  Under $25M (4.9%)
  • 10-year: Over $1B (8.3%)

“The strong overall performance by endowments is encouraging at a time when the global economy continues its relatively slow recovery from the economic crisis of five years ago. This year’s investment results reflect in large measure the strength in publicly traded equities that has prevailed since early 2009. While larger endowments have performed better over the longer-term 10-year period, smaller endowments with higher allocations to domestic equities have done well in the shorter term – a result that has enabled them to continue to support their educational missions,” observed Commonfund Institute Executive Director John S. Griswold in the survey report.

How the endowments invested

The following table provides valuable insight into the investment patterns across different asset classes broken down by size of endowment.


It is interesting to note that investment in equities varies inversely with size. The larger endowments have much lower exposure to equities in percentage terms. In the chart below, observe how the dark blue line slopes downwards as the size of fund increases.

It is the same case with fixed income.

But most interesting is the alternative strategies class – note that the larger endowments have a nearly 60% allocation! Comparatively, the smaller funds have invested only 11% of their assets in alternatives.


Spending trends

The following table shows that spending rates varied higher with the size of the endowment in 2013.

Interestingly, all sizes of funds reported a decline in the spend % between 2004 and 2013.


Managing risk

Endowments reported the use of risk management practices in varying degrees.

About half used risk limits, while 28% did not. About 72% of respondents used volatility, such as standard deviation, as a measure of risk. 55% used alpha and beta. 41% said they used stress testing or scenario analysis.