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This study is based on a survey that Cambridge Associates administers annually to our endowment clients. The report that follows summarizes returns, asset allocation, and other investment-related data for 323 endowed institutions for the fiscal year ended June 30, 2024. Below are commentary and exhibits organized into three key themes: Investment Portfolio Returns, Benchmarking, and Asset Allocation and Implementation.
Fiscal year 2024 was the best-performing year for endowments since 2021, with most reporting double-digit returns. However, it was also the second straight year that the returns of diversified portfolios fell short of an investment option with heavier public allocations. As a result, the three-year return of the peer median underperformed a simple blended index weighted 70% global public equity and 30% fixed income. However, private investments continued to be a key return driver for the best-performing portfolios in the endowment universe over the long term. The Investment Portfolio Returns section highlights these contrasting performance themes for the short-term versus long-term periods.
Investment Portfolio Returns
Benchmarking
There have been some minor shifts in endowment asset allocations in recent years that have diverged from longer-term trends. For example, over the last couple of years, average allocations to public equities have increased, while those to private equity and venture capital have declined. However, these shorter-term changes seem to be driven by market dynamics where strong performance from public equity markets has naturally lifted those allocations within portfolios. When looking at data from an asset allocation policy perspective, the number of endowments decreasing their long-term target to public equity was double the number that reported an increase. The Asset Allocation and Implementation section covers this and other topics, such as the number of external investment managers and the types of investment vehicles (e.g., active versus passive) used.
Asset Allocation and Implementation
Institutional Support
The primary policy benchmark for most respondents is a static-weighted blend of indexes where the weightings align exactly or closely with the asset classes and target percentages specified in the asset allocation policy. Perhaps the most consequential benchmarking decision investors have had to make in recent years is how to represent private equity in the policy benchmark. The majority of respondents use a public index for that representation, and this cohort by and large saw significant underperformance versus their benchmark in 2024. Our Benchmarking section summarizes the various approaches that endowments use for benchmarking total portfolio performance and compares endowment performance versus policy benchmark returns.
The net flow rate considers the combined impact of inflows and outflows on the endowment portfolio’s overall growth. Because part of annual spending is offset by new gifts, portfolio growth over time is much greater than it would be based on performance after spending alone. In fact, for this year’s survey group, median portfolio growth over the last decade was 30% higher than it would have been if there were no inflows. Our Institutional Support section contains analysis on this and other statistics related to the financial support that C&Us receive from their endowments.
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Institutions Have an
Asset Size Between $200 Million and $1 Billion
105
Institutions Have an Asset Size Less Than $200 Million
87
Other Endowed Institutions
44
Hospitals
35
Colleges & Universities
159
Institutions Have an Asset Size Greater Than $1 Billion
131
Profile of Respondents
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Cultural or Environmental Institutions
54
Independent
Schools
31