Photographer: Bruce Leighty/Getty Images

Tiny Iowa School Leads Endowments With 18.8% Investment Return

  • Grinnell, Ohio State, Illinois surpass average 12.7% gain
  • Grinnell’s endowment funds about half the school’s budget

Grinnell College’s 18.8 percent investment return is leaving others in the dust -- for now.

The endowment, with a preliminary value of $1.8 billion at June 30, has the top return among at least 20 of the largest college funds that began reporting performance for fiscal 2017. The average increase for endowments and foundations for the 12 months through June was 12.7 percent, according to early data by Cambridge Associates of more than 400 institutions.

The public equities portion of Grinnell’s fund was the big contributor to the performance, with a 25 percent gain, outgoing chief investment officer Scott Wilson said in an interview. Grinnell didn’t have an immediate comment on the numbers.

Broad Portfolio

“It’s a broad global portfolio with exposure in Asia, Europe and the U.S.,” Wilson said. “It’s a very concentrated portfolio relative to our peers.”

Instead of investing with 50 equity managers, Grinnell has six, he said. Within each fund, they tend to own five to 15 stocks instead of 100.

The wealthy private school in Iowa, which has about 1,600 students, has been in the top spot before. It tied with the University of Minnesota in fiscal 2014 with a 20.4 percent return. Grinnell’s average five-year return is about 10 percent, Wilson said.

The target asset allocation was about 40 percent in public equities and 30 percent in private equity, he said. Another 12.5 percent was in hedge funds; 7.5 percent in real assets and the rest in cash and fixed income. The endowment funds about half the school’s budget.

The fund is losing Wilson, who heads to Washington University in St. Louis in December to lead its $8 billion endowment. Berkshire Hathaway Inc.’s Warren Buffett was once an adviser to Grinnell’s fund.

Midwest Schools

Investments at another Midwest school, the University of Illinois Foundation, gained 15 percent in fiscal 2017, according to the school. The return reflects the value of private equity holdings through March. The foundation manages $1.6 billion, and another $674 million is managed by the university.

The foundation’s 10-year return is 4.3 percent. It allocates about 19 percent each to U.S. and foreign developed equity, and 10 percent to non-U.S. emerging equity.

“A year like the one just ended helps ‘re-fill the bucket’ after two lean years,” Ellen Ellison, CIO of the Illinois Foundation, said in an email.

Ohio State University said its investments returned 14.5 percent. The portfolio was boosted by a 20 percent gain in global equities and a 15 percent increase in real assets. The school was 43 percent invested in public equities.

The fund’s value was $4.25 billion as of June 30. The endowment will grow an additional $1 billion in the current fiscal year, because of a payment from two energy companies that will lease the school’s energy assets for 50 years. The 10-year return is 3.4 percent.

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