Hedge Funds, Stocks Drag Trinity College Endowment to 5.4% Loss

  • Investure clients Trinity, Dickinson among worst performers
  • More than a dozen large college endowments reported losses

Trinity College’s endowment, managed by Investure LLC, said it posted a 5.4 percent loss in fiscal 2016, dragged down by investments in equities, hedge funds and private equity.

Trinity, along with fellow Investure client Dickinson College, are the worst-performing U.S. university endowments among those reporting so far for the year ended June 30. More than a dozen university endowments with more than $1 billion have losses. College endowments will continue to report investment performance through next month.

“Although endowment returns in FY 2016 were disappointing, we are focused on longer-term returns while continuing to evaluate and adjust as necessary based on perceived changes in the market,” Joanne Berger-Sweeney, Trinity’s president, wrote in a report posted on the school’s website.

Sectors Struggled

The value of Hartford, Connecticut-based Trinity’s fund was $523 million as of April 30; a value for the fiscal year through June 30 wasn’t provided in the report.

“The public equity, hedge fund, and private equity investments, which account for the majority of the fund, struggled during 2015-16,” according to the report. “The fund is invested with active managers who have performed well over longer periods of time but underperformed relative to broader standards in the past fiscal year.”

Dickinson, a small private liberal arts school in Carlisle, Pennsylvania, with a $412 million endowment, posted a 4.4 percent investment loss. Both schools have outsourced their endowment management to Investure, a Charlottesville, Virginia-based investment firm run by Alice Handy that has $12 billion of endowment and foundation funds under management.

“Our clients own their own performance and need to comment on them,” Handy said in an e-mail, declining to comment further.

Spending Rate

Investure’s other clients, which include the University of Tulsa, Smith College and Middlebury College, reported some of the best investment returns among college funds in fiscal 2015, according to data compiled by Bloomberg. These schools haven’t yet reported fiscal 2016 performance.

Funds with more than $500 million lost a median 0.73 percent in fiscal 2016, according to the Wilshire Trust Universe Comparison Service. The Wilshire data, from fund custodians, exclude fees while most schools report returns net of fees. A benchmark 60/40 portfolio of the Wilshire 5000 Total Stock Market Index for U.S. equities and the Wilshire Bond Index returned 4.5 percent in fiscal 2016.

Trinity, which posted a 7.7 percent investment gain in fiscal 2015, doesn’t plan to immediately adjust the amount that the endowment contributes to the college’s annual operating budget, according to the report, which noted that the spending rate is calculated on a three-year rolling average.

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