Yale’s endowment earned a 6.8% investment return (net of fees) for the year ending June 30, 2020. The endowment value increased from $30.3 billion on June 30, 2019, to $31.2 billion on June 30, 2020.
Spending from the endowment, which is the largest source of revenue for the university and supports faculty salaries, student scholarships, and other expenses, for Yale’s 2021 fiscal year is projected to be $1.5 billion, representing approximately 35% of the university’s net revenues. Endowment distributions to the operating budget have increased at an annualized rate of 7.9% over the past 20 years. Those distributions support, among other priorities, Yale’s commitment to meeting the full financial need of every student enrolled in Yale College.
The university’s longer-term results remain in the top tier of institutional investors. Yale’s endowment returned 10.9% per annum over the 10 years ending June 30, 2020, trailing broad market results for domestic stocks, which returned 13.7% annually, and exceeding results for domestic bonds, which returned 3.8% annually. Relative to the estimated 7.4% average ten-year return of college and university endowments, Yale’s investment performance added $9.6 billion of value in the form of increased spending and enhanced endowment value. During the 10-year period, the endowment grew from $16.7 billion to $31.2 billion.
Yale’s endowment returned 9.9% per annum over the 20 years ending June 30, 2020, exceeding broad market results for domestic stocks, which returned 6.2% annually, and for domestic bonds, which returned 5.1% annually. Relative to the estimated 5.6% average return of college and university endowments, over the past 20 years Yale’s investment performance added $25.9 billion of value in the form of increased spending and enhanced endowment value. During the 20-year period, the endowment grew from $10.0 billion to $31.2 billion.
Long-term asset class performance
Yale’s 10-year asset class performance is solid. Domestic equities returned 12.8%, underperforming the benchmark by 1.0% annually. Foreign equities produced returns of 15.8%, surpassing the composite benchmark by 10.7% annually. Absolute return produced an annualized return of 5.3%. Leveraged buyouts returned 14.6%, while venture capital returned 21.3%. Real estate and natural resources contributed annual returns of 9.7% and 4.4%, respectively.
Yale’s 20-year asset class performance remains strong. Domestic equities returned 9.7%, besting the benchmark by 3.5% annually. Foreign equities produced returns of 14.8%, surpassing the composite benchmark by 9.3% annually. Absolute return produced an annualized return of 8.1%. Leveraged buyouts returned 11.2%, while venture capital returned 11.6%. Real estate and natural resources contributed annual returns of 8.3% and 13.6%, respectively.1
Asset allocation
Yale continues to maintain a well-diversified, equity-oriented portfolio, with the following asset allocation targets for fiscal year 2021:
Absolute return
23.5%
Venture capital
23.5%
Leveraged buyouts
17.5%
Foreign equity
11.75%
Real estate
9.5%
Bonds and cash
7.5%
Natural resources
4.5%
Domestic equity
2.25%
Yale targets a minimum allocation of 30% of the endowment to market-insensitive assets (cash, bonds, and absolute return). The university further seeks to limit illiquid assets (venture capital, leveraged buyouts, real estate and natural resources) to 50% of the portfolio.
Yale’s spending and investment policies provide substantial levels of cash flow to the operating budget for current scholars, while preserving endowment purchasing power for future generations. Approximately a quarter of spending from the endowment is specified by donors to support professorships and teaching. Nearly a fifth is dedicated to scholarships, fellowships and prizes. Almost a quarter is available for general university purposes. The remaining endowment funds are donor-designated to support specific departments or programs.
1 Yale employs time-weighted returns to assess manager performance in marketable equities and absolute return, because the cash flows to and from the asset classes are determined by the university. Returns reported for leveraged buyouts, venture capital, real estate and natural resources are dollar-weighted internal rates of return, because the managers of illiquid asset classes determine when to buy and sell assets.
TORONTO – Canada’s main stock index was down more than 200 points in late-morning trading, weighed down by losses in the technology, base metal and energy sectors, while U.S. stock markets also fell.
The S&P/TSX composite index was down 239.24 points at 22,749.04.
In New York, the Dow Jones industrial average was down 312.36 points at 40,443.39. The S&P 500 index was down 80.94 points at 5,422.47, while the Nasdaq composite was down 380.17 points at 16,747.49.
The Canadian dollar traded for 73.80 cents US compared with 74.00 cents US on Thursday.
The October crude oil contract was down US$1.07 at US$68.08 per barrel and the October natural gas contract was up less than a penny at US$2.26 per mmBTU.
The December gold contract was down US$2.10 at US$2,541.00 an ounce and the December copper contract was down four cents at US$4.10 a pound.
This report by The Canadian Press was first published Sept. 6, 2024.
TORONTO – Canada’s main stock index was up more than 150 points in late-morning trading, helped by strength in technology, financial and energy stocks, while U.S. stock markets also pushed higher.
The S&P/TSX composite index was up 171.41 points at 23,298.39.
In New York, the Dow Jones industrial average was up 278.37 points at 41,369.79. The S&P 500 index was up 38.17 points at 5,630.35, while the Nasdaq composite was up 177.15 points at 17,733.18.
The Canadian dollar traded for 74.19 cents US compared with 74.23 cents US on Wednesday.
The October crude oil contract was up US$1.75 at US$76.27 per barrel and the October natural gas contract was up less than a penny at US$2.10 per mmBTU.
The December gold contract was up US$18.70 at US$2,556.50 an ounce and the December copper contract was down less than a penny at US$4.22 a pound.
This report by The Canadian Press was first published Aug. 29, 2024.
The crypto market has recently experienced a significant downturn, mirroring broader risk asset sell-offs. Over the past week, Bitcoin’s price dropped by 24%, reaching $53,000, while Ethereum plummeted nearly a third to $2,340. Major altcoins also suffered, with Cardano down 27.7%, Solana 36.2%, Dogecoin 34.6%, XRP 23.1%, Shiba Inu 30.1%, and BNB 25.7%.
The severe downturn in the crypto market appears to be part of a broader flight to safety, triggered by disappointing economic data. A worse-than-expected unemployment report on Friday marked the beginning of a technical recession, as defined by the Sahm Rule. This rule identifies a recession when the three-month average unemployment rate rises by at least half a percentage point from its lowest point in the past year.
Friday’s figures met this threshold, signaling an abrupt economic downshift. Consequently, investors sought safer assets, leading to declines in major stock indices: the S&P 500 dropped 2%, the Nasdaq 2.5%, and the Dow 1.5%. This trend continued into Monday with further sell-offs overseas.
The crypto market’s rapid decline raises questions about its role as either a speculative asset or a hedge against inflation and recession. Despite hopes that crypto could act as a risk hedge, the recent crash suggests it remains a speculative investment.
Since the downturn, the crypto market has seen its largest three-day sell-off in nearly a year, losing over $500 billion in market value. According to CoinGlass data, this bloodbath wiped out more than $1 billion in leveraged positions within the last 24 hours, including $365 million in Bitcoin and $348 million in Ether.
Khushboo Khullar of Lightning Ventures, speaking to Bloomberg, argued that the crypto sell-off is part of a broader liquidity panic as traders rush to cover margin calls. Khullar views this as a temporary sell-off, presenting a potential buying opportunity.
Josh Gilbert, an eToro market analyst, supports Khullar’s perspective, suggesting that the expected Federal Reserve rate cuts could benefit crypto assets. “Crypto assets have sold off, but many investors will see an opportunity. We see Federal Reserve rate cuts, which are now likely to come sharper than expected, as hugely positive for crypto assets,” Gilbert told Coindesk.
Despite the recent volatility, crypto continues to make strides toward mainstream acceptance. Notably, Morgan Stanley will allow its advisors to offer Bitcoin ETFs starting Wednesday. This follows more than half a year after the introduction of the first Bitcoin ETF. The investment bank will enable over 15,000 of its financial advisors to sell BlackRock’s IBIT and Fidelity’s FBTC. This move is seen as a significant step toward the “mainstreamization” of crypto, given the lengthy regulatory and company processes in major investment banks.
The recent crypto market downturn highlights its volatility and the broader economic concerns affecting all risk assets. While some analysts see the current situation as a temporary sell-off and a buying opportunity, others caution against the speculative nature of crypto. As the market evolves, its role as a mainstream alternative asset continues to grow, marked by increasing institutional acceptance and new investment opportunities.
