Our Fearless Forecast: Endowment Returns will Disappoint for FY2015
We are here to assuage all anxiety with a fearless forecast, and it's not going to spread much joy across the campi
The typical full-year number for big endowments will probably be just 4 to 6 percent. A few of the high-flyers may do a little better. Some others will be lucky to see 3 percent.
That means most endowments will fall short of their long-term target rate of return, which is a little north of 7 percent nominal.
That's a big drop from last year's average 16.5 percent and even below the recent 10-year average of about 8.2 percent for endowments over $1 billion.
Most schools won't publish an official annual return number for some weeks, but a few major endowments release quarter-by-quarter reports. We can use them to project full-year results and get a feel for what happened in the year just past
We have hard numbers for the first three quarters for four big schools: University of California Regents, University of Washington, University of Florida and Cornell University; all over $1 billion.
With the first three quarters baked in, it was only necessary to project a 4th-quarter value, and we can do that with fair confidence since all the major benchmarks are available for the quarter ending in June.
In the case of University of Florida we don't even need that crutch, since they've already released their full-year results.
Here are the full-year numbers:
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