Forget the Duke Game: Yale's Knock-Out Endowment Performance Earns It a Tournament Win

Reimagining the March Madness bracket in which wins are based exclusively on endowment performance, not three-pointers and rebounds.

Duke University may have knocked Yale out of the NCAA men's basketball tournament, but if it were the schools' endowments that were competing, it would have been a very different story. Duke's $7.3 billion fund trailed with a 4.4 percent investment return for the year ended June 30 compared with Yale's 11.5 percent return on its $25.6 billion fund. In that kind of match-up, Duke wouldn't have stood a chance.

In this feature, based on data available to Bloomberg terminal subscribers, we reimagine the March Madness bracket in which wins are based exclusively on endowment performance, not three-pointers and rebounds.

Note: All data as of June 30, 2015, except for St. Joseph's, whose returns are as of May 31, 2015, and SFA, whose returns are as of Aug. 31, 2015
Note: All data as of June 30, 2015, except for St. Joseph's, whose returns are as of May 31, 2015, and SFA, whose returns are as of Aug. 31, 2015
Bloomberg ENDO

For sake of comparison, we disregard the size of the endowments and judge each round based solely on one-year return. (The one exception is Oklahoma and Texas A&M's match-up; since both had a return of 5 percent, we judged that round on overall endowment size.) With those metrics, Yale would have been named national champion, rather than getting knocked out in the round of 32. The worst fund performer among the March Madness crowd? University of Dayton, with a 1.9 percent loss.

Of the teams that made it to the actual Final Four, University of North Carolina’s $3 billion fund led with a 9.3 percent gain; University of Oklahoma’s $1.5 billion fund returned 5 percent; and Villanova’s $553 million fund was up 2.1 percent. Syracuse, with a $1.2 billion fund, came in last of the Final Four at 1.4 percent.

Overall, U.S. college endowments struggled in fiscal 2015, gaining 2.4 percent on average, according to the National Association of College and University Business Officers and money manager Commonfund. That compares with a 4.6 percent return in the Standard & Poor’s 500-Stock Index. Fiscal 2016, which ends June 30, is shaping up to be even tougher. Fifteen endowments that provided Bloomberg with total returns for the second half of 2015 lost 3.6 percent on average.

There’s always next year.

This story and graphic originally ran in Bloomberg Brief's Private Equity newsletter.

(Corrects Villanova's investment return in chart and in fourth paragraph in a story published March 30.)
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