By George Anders
Elite U.S. colleges and universities are posting improved investment returns for the year ended June 30, but their results aren't much to brag about when compared with major market benchmarks.
Yale yesterday reported a 22 percent return on its $19.4 billion endowment for fiscal 2011, while Dartmouth posted an 18.4 percent gain. Other notable numbers from earlier this month: Duke, a gain of 24.5 percent; Stanford, returns up 22 percent; University of Pennsylvania, a 19 percent gain; and MIT, up 17.9 percent.
Those gains can help pay for a lot of research labs, scholarships and new dormitories. Even so, the schools' returns lag behind the advances in major stock indexes. According to data compiled by Bloomberg, the Standard & Poor's 500 Index delivered a total return of 30.7 percent in the 12 months ended June 30, while the MSCI World Index was up 31.2 percent.
Universities typically make stocks a big but not exclusive part of their portfolios. Bonds, real estate and private partnerships round out the mix. Those other categories can provide valuable diversification during years when stocks perform poorly, though they may crimp returns when stocks are soaring.
With stocks off to a dismal start in the current academic year, campus officials are bound to be hoping that those diversification strategies will do some good.
(George Anders is a member of the Bloomberg View editorial board.)-0- Sep/29/2011 15:34 GMT