Best NCAA Investor Tourney Produces a Surprise West Coast Winner

  • This March Madness bracket is based on endowment performance
  • University of Oregon scores with 2.5% return to take the title

Call them the Mighty Ducks. The University of Oregon has pulled off two amazing feats: the school’s endowment had a positive return in its last fiscal year and the men’s basketball team known as the Ducks landed a spot in the NCAA tournament Final Four.

The $755 million fund posted a 2.5 percent return in the year through last June to win Bloomberg’s second annual March Madness endowment bracket, topping Texas Southern University’s 1.9 percent gain. Most endowment returns are calculated on a fiscal year ending June 30.

“We made fewer mistakes in the tournament than others made,” Jay Namyet, chief investment officer of the foundation that manages Oregon’s endowment, said this week in an interview. “That combined with our careful shot selection. That’s why we did so well in the tournament.”

The tourney replicates the actual National Collegiate Athletic Association’s 64-team bracket for March Madness, though victories are determined based on one-year endowment results as compiled by Bloomberg and available to terminal subscribers at ENDO.

Yale University, a powerhouse among endowments and the winner of Bloomberg’s 2016 bracket, didn’t make the cut this year because its basketball team didn’t earn a March Madness spot. While Princeton University’s team advanced in the tournament, its endowment had a 0.8 percent return. The worst performer? Middle Tennessee State University, with a 5.5 percent loss.

Overall, U.S. college endowments suffered losses in fiscal 2016, with an average decline of 1.9 percent, according to the National Association of College and University Business Officers and money manager Commonfund. Fiscal 2017 looks more positive, with funds of all sizes gaining a median 4.4 percent in the six months through Dec. 31, according to Wilshire Trust Universe Comparison Service.

‘Few Turnovers’

Oregon’s performance was boosted in part by investments in private equity and real estate, Namyet said. The foundation’s asset allocation in fiscal 2016 was unchanged from the prior year, with 40 percent in global equity, 25 percent in diversification strategies that include absolute return funds and 20 percent in private equity and 15 percent in inflation protection, he said.

Namyet said the Eugene, Oregon-based foundation’s investing style is “fundamental ball control. We give up few turnovers. We’re patient with our shot selection and we only rely on three-pointers occasionally to help cushion our returns.”

Back to real basketball. On April 1, Oregon will play the University of North Carolina Tar Heels, while the University of South Carolina Gamecocks face the Gonzaga University Bulldogs. Among these four schools, only Oregon had a positive endowment performance.

It’s the first Final Four for South Carolina and Gonzaga. It’s the second trip for Oregon -- the team’s first and last Final Four appearance was in 1939. Fun fact: That was the first year of the men’s national basketball tournament. Oregon won.

Solid Returns

Oregon’s endowment hasn’t had a similar drought. The fund’s annual 10-year return is 6.4 percent; that’s an annualized 8.1 percent for the past five years.

Namyet called himself a “player coach” for his staff of five at the foundation. He also gave credit to one of the fund’s external money managers, Bienville Capital Management, for its successful selection of Argentinian equities in the portfolio.

Yale won last year with an 11.5 percent gain. If its basketball team had been in this year’s tourney, the New Haven, Connecticut-based school would have been a repeat winner. Its $25.4 billion endowment earned 3.4 percent in fiscal 2016.

— With assistance by Michael McDonald, and Janet Lorin

    Before it's here, it's on the Bloomberg Terminal.
    LEARN MORE