Stanford Management Company releases 2016 results
For the 12 months ending June 30, 2016, Stanford University’s Merged Pool generated an investment return of -0.4 percent net of fees, Stanford Management Company announced.
This result surpassed the -2.9 percent median preliminary return of U.S. colleges and universities as reported by Cambridge Associates, and modestly exceeded the portfolio’s composite benchmark return of -0.6 percent.
Over a longer period of time, Stanford’s investment performance has added substantial resources to the University. For the last 20 years, the Merged Pool generated a 10.7 percent annualized return net of all investment fees, outperforming its composite benchmark by 1.9 percent per annum and adding more than $12.2 billion of value versus the median result of colleges and universities. This strong performance helped drive a seven-fold increase in the annual payout to the University over this period, supporting academic programs that further Stanford’s mission, including financial aid that dramatically reduces the effective cost for students to attend the University.
The Merged Pool is Stanford’s primary investment vehicle and includes most of the university’s endowment and expendable funds, as well as capital reserves from Stanford Health Care and Lucile Packard Children’s Hospital at Stanford.
Stanford University’s endowment rose in value by 0.8 percent over the past year to $22.4 billion as of August 31, 2016, the last day of Stanford’s fiscal year. The change in endowment value results from investment gains and losses, endowment gifts and other funds transferred into the endowment, offset by the annual payout for university operations. The university’s endowment payout for fiscal year 2016 was $1.13 billion, equal to 5.1 percent of the beginning-of-year endowment value, and representing approximately 22 percent of the university’s total operating revenue. Budgeted endowment payout for fiscal year 2017 is $1.18 billion.
“Despite a difficult investment climate, the endowment increased as a result of the generosity of Stanford’s donors, positive Merged Pool returns for the August fiscal year, and substantial growth in the value of income-generating properties on Stanford’s lands,” said Randy Livingston, vice president for business affairs and chief financial officer. “The endowment provides a critical source of support for our student financial aid, as well as our research and education programs more broadly.”
In FY16, Stanford spent over $450 million of University funds for student financial aid, of which approximately 57 percent was from restricted endowment funds and the remainder from unrestricted University funds. Families living in the U.S. with incomes below $125,000 pay no undergraduate tuition. Over 75 percent of Stanford undergraduates graduate with no debt, and for those that do borrow, median debt in 2015 was $16,417. This is contrasted with 69 percent of students nationwide who graduated with an average student loan debt of $29,000 from public and nonprofit colleges in 2014, according to The Project on Student Debt.
“We are proud that a Stanford education is affordable for our middle-class admitted students,” Livingston said.