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Preliminary Data Indicate Higher Education Endowments Earned Investment Returns Averaging 19.8% in FY2011
Commonfund News

November, 2011

The FY2011 effective spending rate for the group averaged 4.3 percent, but for the two largest endowment cohorts with assets over $500 million the effective spending rates were 5.1 percent and 5.0 percent, respectively.

“What stands out in these preliminary figures is the fact that, despite the positive returns of this year and last, endowments still have not completely recovered from the damage inflicted by the market declines that accompanied the 2008-09 credit crisis," NACUBO President and Chief Executive Officer John D. Walda and Commonfund Institute Executive Director John S. Griswold said in a joint statement.  “The average endowment is still at only 86 percent of its value in FY2007, using return data from past NCSE reports and a 5 percent spending rate,” they noted, “and longer-term returns for five- and ten-year periods are only 5.0 percent and 5.5 percent, respectively – not significantly higher than the spending rate for many institutions.  It will take several more years of positive returns for endowments to recover fully from the crisis.”

In the past, larger endowments have tended to significantly outperform smaller ones. This year’s sample, however, reveals a very tight spread, as institutions with assets over $1 billion returned 20.2 percent on average, while those with assets below $25 million reported an average return of 19.1 percent. Mid-range endowments—those with assets between $101 and $500 million—reported an average return of 19.9 percent. The lowest average return—18.9 percent—came from endowments with assets between $25 and $50 million. The highest average return—20.3 percent—was reported by endowments with assets between $51 and $100 million.

While average returns were quite similar across size groups, the way they were earned varied widely. For example, institutions with assets over $1 billion reported allocations to domestic equities that averaged just 12 percent. At the opposite end of the size spectrum, endowments with assets below $25 million reported a 41 percent allocation. Similarly, the two largest size cohorts reported average fixed income allocations of 10 percent or less, while the three smaller size cohorts all had average fixed income allocations in excess of 20 percent. Major differences emerged once again in allocations to alternative strategies, as institutions with assets over $1 billion reported an average allocation of 58 percent, while institutions with assets under $25 million reported an average alternatives allocation of 9 percent. In general, allocations to international equities and short-term securities/cash/other were more consistent across the size cohorts. (All allocations are reported on a dollar-weighted basis.)

Researchers are still gathering and tabulating data for the full NCSE; final results will be released in late January. Last year’s NCSE reported and analyzed return data and a broad range of related information reported by 850 U.S. colleges and universities, both public and private, as well as their supporting foundations. The size and scope of the Study make it the most comprehensive annual report on the investment management and governance practices and policies of institutions of higher education across the U.S.

Final Study results and analysis will go into much greater depth—including data on governance policies and practices— and will break out data not only by size of endowment but also by type of institution (public, private and foundations).


NACUBO is a membership organization representing more than 2,500 colleges, universities and higher education service providers across the country and around the world. NACUBO specifically represents chief business and financial officers through advocacy efforts, community service and professional development activities. The association’s mission is to advance the economic viability and business practices of higher education institutions in fulfillment of their academic missions. For additional information, please visit

About Commonfund Institute

Commonfund Institute houses the education and research activities of Commonfund and provides the entire community of long-term investors with investment information and professional development programs. Commonfund Institute is dedicated to the advancement of investment knowledge and the promotion of best practices in financial management. In addition to teaming with NACUBO to produce the NCSE, Commonfund Institute provides a wide variety of resources, including conferences, seminars and roundtables on topics such as endowments and treasury management; proprietary and third-party research and publications, including the Higher Education Price Index (HEPI); and events such as the annual Commonfund Forum and Commonfund Endowment Institute.

About Commonfund
Founded in 1971, Commonfund is an institutional investment firm serving nonprofit institutions, pension funds and other leading institutional investors offering a broad range of investment solutions in traditional and alternative strategies.  Directly or through its subsidiaries—Commonfund Capital and Commonfund Asset Management Company— Commonfund manages over $27 billion for over 1,500 clients. Commonfund, together with its subsidiary companion organizations, offers more than 30 different investment programs. All securities are distributed through Commonfund Securities, Inc
., a member of FINRA.  For additional information about Commonfund, please visit


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