October 18, 2022
Stanford University reports return on investment portfolio, value of endowment
Stanford University reported returns on its investment portfolio as of June 30, 2022, and the value of its endowment as of the close of its fiscal year, Aug. 31, 2022.
Stanford University today announced a -4.2% investment return in its Merged Pool, net of all external and internal costs and fees, for the year ending June 30, 2022. The Merged Pool is the principal investment vehicle for the university’s endowment.
Stanford’s performance surpassed the -6.3% median return for U.S. college and university endowments for the year, as preliminarily reported by Cambridge Associates. A typical “70/30” passive portfolio of global stocks and high-quality U.S. bonds returned -14.6% over the same period.
The value of the Merged Pool was $40.1 billion as of June 30, 2022. The fund also includes capital reserves of Stanford Health Care and Lucile Packard Children’s Hospital at Stanford, along with other long-term funds.
The value of the university’s endowment, which includes approximately 75% of the Merged Pool as well as other assets such as real estate, was $36.3 billion on Aug. 31, 2022, the end of its fiscal year. The endowment is intended to sustain university programs over the long term, and a payout each year provides critical support for current operations.
In fiscal year 2022, the endowment disbursed $1.5 billion to support vital academic programs and financial aid. Payout from the endowment funded over 21% of the university’s 2022 operating expenses. Over the past two years, an additional $447 million was withdrawn from the endowment to address COVID-related revenue shortfalls and expenses. For fiscal year 2023, payout from the endowment is budgeted at $1.75 billion. The endowment must grow with inflation to maintain its purchasing power and support the university’s and donors’ commitment to students, faculty, and projects for decades to come.
“Diversification and disciplined portfolio management helped preserve value relative to equity and credit markets, which sharply corrected following their very material rise during the previous year,” said Robert Wallace, chief executive officer of the Stanford Management Company. “It seems prudent to expect continued financial market volatility amid economic uncertainty and an altered interest rate environment.”
Stanford’s five- and 10-year net annualized investment performance of 10.9% and 10.2%, respectively, compares with the median college and university endowment return of 8.4% and 8.1% over the same time periods.
The endowment includes more than 7,700 funds established by philanthropic donors over the years and designated for specific purposes. They support student scholarships and also advance particular fields of study through professorships, fellowships, and research funds.
Stanford Management Company invests the endowment and other financial assets to provide long-term support to the university. Careful stewardship of endowed funds helps ensure that important resources, including financial aid, are available for present and future generations of students, faculty, staff, and patients.
Stanford Management Company invests capital in accordance with its Ethical Investment Framework and strives to work with the most capable partners pursuing disciplined, long-term investment in the U.S. and across the world.