Stanford releases annual financial results for investment return, endowment
Stanford University today announced two separate annual financial results. The Stanford Management Company reports return on its investment portfolio as of June 30, 2018. The university also reports the value of its endowment as of the close of its fiscal year, August 31, 2018.
For the 12 months ending June 30, 2018, Stanford Management Company generated an 11.3 percent investment return, net of all internal and external costs and fees. The broad universe of U.S. colleges and universities generated a median 8.3 percent return for the same period, according to preliminary data tracked by Cambridge Associates.
“We are pleased to report $3.0 billion of investment gains for the year that will help support Stanford’s educational and research missions, as well as its commitment to student financial aid,” said Robert Wallace, chief executive officer of Stanford Management Company. “Our results were bolstered by significant value added above benchmark results in our public equity portfolios, where we have worked to upgrade our capabilities over the last three years. Performance in illiquid asset classes, including private equity, was strong in absolute terms but trailed our expectations in relative terms. Our efforts to reposition the illiquid asset classes are still in early stages and will require more time to complete.”
For the last five and 10 years, respectively, Stanford generated a 9.4 percent and 6.3 percent annualized net return, versus the 7.2 percent and 5.5 percent annualized median returns for colleges and universities over the same time periods.
Stanford Management Company is the university’s investments office and manages Stanford’s $28.7 billion Merged Pool. The Merged Pool is the principal fund for investing the university’s endowment and also includes capital reserves of Stanford Health Care and Lucile Packard Children’s Hospital Stanford, along with other long-term funds. More information is available on the Stanford Management Company website.
The value of the university’s endowment was $26.5 billion on August 31, 2018, the end of the university’s fiscal year. The endowment disbursed $1.2 billion to support academic programs and financial aid during the fiscal year, equal to 5.0 percent of the endowment’s value at the beginning of the fiscal year.
Stanford’s endowment is intended to provide financial support for the university in perpetuity. Approximately 5 percent of the endowment’s total value is paid out each year, and this payout funds approximately 20 percent of the university’s operating budget. Rather than a single fund, the endowment consists of more than 7,000 individual gifts from donors, with most gifts restricted to specific uses.