15 Biggest Endowments in the US and Their Investments
In this article, we discuss the 15 biggest endowments in the US and their investments. You can skip our detailed analysis of the biggest American endowments and go directly to 5 Biggest Endowments in the US and Their Investments.
Biggest endowment funds in the US are in the academic sector. These are funds belonging to universities/colleges that they use for their short and long term goals, such as student aid, research, campus development and maintenance as well as teaching programs among others. The endowments’ principal sums mostly come from donations and fundraisings.
Academic endowment funds usually follow a fixed strategy of asset allocation that is in-line with their medium to long-term financial goals. The return target is usually a mean 7.5% to cover for expenses and inflation, according to Higher Ed Drive, a higher education news agency.
Moreover, specific spending guidelines underlie most university endowment funds. For instance, 4.5%-5% of the annual assets value is typical for many academic institutions.
Performance
Endowment funds had a relatively decent run in 2021, with returns averaging at 31%, outperforming the S&P 500 for the same year by 4%. In terms of five-year annualized returns, the endowment funds average out at 11.4%. In the fiscal year 2022 however, they were caught in the broader market downturn, averaging at -6%, according to Cambridge Associates.
The firm also noted that the 2022 loss was the worst for academic endowments since 2009, at a time when endowments are investing in moderate to high-risk assets like private equity to up their returns.
Endowments’ Hierarchy
In terms of the structure of academic endowment funds, 84% of $0.8 trillion of endowment wealth studied by The NACUBO is held by only 136 institutions, with the top three institutions accounting for $130 billion alone, as noted by Higher Ed Drive.
These include Harvard University, University of Texas System and Yale University, with Harvard claiming the largest share of the pie, at $50.9 billion. To single out Harvard’s endowment, it returned 33.6% in 2021, while posting a negative 1.8% in 2022, primarily driven by the ongoing stagflation. However, it fared far better considering the S&P 500 benchmark, with the index having a negative return of 13% so far in 2022.
Some of the prominent stocks in Harvard Management Company’s portfolio include NVIDIA Corporation (NASDAQ:NVDA), Meta Platforms, Inc. (NASDAQ:META) and Alphabet Inc. (NASDAQ:GOOG).
With that in mind, let’s move on to the list of 15 biggest endowments in the US and their investments.
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Our Methodology
For our list of the 15 biggest endowments in the US and their investments, we’ve ranked universities based on their endowments’ market value for their latest fiscal year. We’ve gathered the data from universities’ official websites.
Here’s the 15 biggest endowment funds in the US and their investments.
15. Emory University
Value: $11 billion
Emory University is located in Atlanta, Georgia. The university’s fund consists of 2,000 distinct endowments, with a collective value of $11 billion as of the end of fiscal year 2021.
Its major 13F holdings in Q3, 2022 include shares of Apple Inc. (NASDAQ:AAPL), Amazon.com, Inc. (NASDAQ:AMZN) and SPDR S&P 500 ETF Trust (NYSE:SPY), comprising 17%, 15% and 27% of its portfolio, respectively.
The investment strategy of Emory’s endowment fund is to generate lucrative returns through portfolio concentration in top-tier securities.
14. Duke University
Value: $12.1 billion
Duke University is a private academic institute situated in Durham, North Carolina. As of Q2, 2022, the university’s endowment comprises over 5,800 distinct funds, collectively valued at $12.1 billion. Its 10-year annualized return was 11.3% in FY 2022.
In the same fiscal year, its one-year return was -1.8% due to the ongoing macroeconomic crisis. However, for perspective, its losses were miniscule relative to the overall market. For instance, MSCI All Country World index had posted returns of -15.8% during the same period.
The endowment is diversified across several financial instruments like equity, credit, commodity and real estate among others, with equity comprising 48% of its portfolio.
It’s chiefly managed by Dumac, Inc and in Q3, 2022, had a position in 19 equity securities, with shares of Overseas Shipholding Group, Inc. (NYSE:OSG), Oscar Health, Inc. (NYSE:OSCR) and Alibaba Group Holding Limited (NYSE:BABA) together comprising 87% of Dumac portfolio.
13. Washington University in St Louis
Value: $12.3 billion
Washington University in St Louis is a private academic institute located in St Louis county. It is one of the most prestigious universities in the United States. Its endowment value has increased to $12.3 billion as of Q2, 2022.
The fund has 60.6% of its investments in private capital, followed by global equity, at nearly 21%. Its five-year annualized returns stand at 14% as of the second quarter of 2022, relative to the 4.7% average for the traditional 70/30 stocks and bonds portfolios. However, the current market downturn has led to the fund's 1-year negative return of 10.6% as of June, 2022.
The fund’s investment strategy is oriented towards longer time horizons, with a preference for microeconomic dynamics over macroeconomic ones. Its top four equity holdings in Q3, 2022 are in Coupang, Inc. (NYSE:CPNG), Light & Wonder, Inc. (NASDAQ:LNW), Nu Holdings Ltd. (NYSE:NU) and Moderna, Inc. (NASDAQ:MRNA). Moderna, Inc. (NASDAQ:MRNA) comprises 6% of the fund’s portfolio, with shares worth $17.7 million.
12. University of Notre Dame
Value: $13.3 billion
University of Notre Dame is a Catholic university located in Indiana. Its endowment is valued at roughly $13.3 billion as of FY 2022. Its stock portfolio is entirely concentrated in Berkshire Hathaway Inc. (NYSE:BRK-A) in Q3, 2022, with over 3,60,000 shares worth $97 million.
The investing strategy of University of Notre Dame endowment is based on principles of diversification weighted for long-term growth.
11. Columbia University in the City of New York
Value: $13.3 billion
Columbia University in the City of New York, is an Ivy League university located of course in New York City. The total value of its endowment has increased to $13.3 billion as of FY 2022.
The current macroeconomic situation has led to the fund returning a -7.6% in the same year. However, its trailing 10-year return is a solid 8.8%.
The fund’s top three positions in Q3, 2022 are in Berkshire Hathaway Inc. (NYSE:BRK-A), Sana Biotechnology, Inc. (NASDAQ:SANA) and Tenaya Therapeutics, Inc. (NASDAQ:TNYA).
Its investment strategy relies on analytical theory, foundational knowledge and statistical approaches like regression analyses for stock selection.
10. Northwestern University Fund
Value: $14.9 billion
Northwestern University is a private university located in Evanston, Illinois. Its fund’s value in 2021 was $14.9 billion. Its 2021 returns were an impressive 37%, outperforming its objective by 27.3%.
As of Q3, 2022, it is the holder of equity in seven companies. The top three include Berkshire Hathaway Inc. (NYSE:BRK-A), Agilon Health, Inc. (NYSE:AGL) and Ryan Specialty Holdings, Inc. (NYSE:RYAN). The fund’s investment in Berkshire Hathaway Inc. (NYSE:BRK-A) amounts to $70 million, making up 69% of its portfolio.
For the most part, the fund is managed by the investment committee of Northwestern University’s board of trustees, which comprises professional asset managers. The remaining 9% is directly managed by the institute’s investment office, with a portfolio of mainly debt-securities, per the official university website.
9. University of Michigan
Value: $17.3 billion
University of Michigan is a public university located in Ann Arbor, Michigan. It has one of the biggest endowments in the US. At the end of the fiscal year 2021, its endowment gained $325 million in value, reaching $17.3 billion. Its investing strategy relies on long-term time horizons based on fundamentals as well as growth prospects.
Its 20-year annualized returns are 9.9%, outperforming the S&P 500 index by 0.3%. It beat the 20-year annualized return average of college and university funds by 2.2%. The University’s endowment is a collection of over 1,200 individual funds.
The endowment’s assets are allocated in investment instruments like public equity, private equity, real estate, commodities and venture capital.
8. University of California
Value: $20.4 billion
University of California is a public research university network located in California. It has its campuses in many Californian cities like Berkeley, Los Angeles and San Francisco among others.
The university’s endowment's market value stood at $20.4 billion at the end of the fiscal year 2022, with the general endowment valued at $18.2 billion. The value shoots up to $20.4 billion considering the university's blue and gold endowment pools. Amid the ongoing market downturn, the return for the general endowment fund for the same fiscal year was -7.6%.
Some of the notable positions in the fund’s portfolio in Q3, 2022 are in companies like Berkshire Hathaway Inc. (NYSE:BRK-A), Exxon Mobil Corporation (NYSE:XOM), The Coca Cola Company (NYSE:KO), Wells Fargo & Company (NYSE:WFC) and Merck & Co., Inc. (NYSE:MRK).
7. University of Pennsylvania
Value: $20.7 billion
University of Pennsylvania is located in Philadelphia. It is another Ivy League university on the list of biggest endowments in the US and their Investments. Penn endowment comprises more than 8,400 individual funds, valued in total at $20.7 billion at the end of the fiscal year 2022.
The Penn Endowment has a five-year annualized return of 11.9% leading up to FY 2022. Its one-year return for FY 2022 was 0%, which is not as bad as it looks since the average return for academic endowments in the period is -6%.
Its investment strategy is based on the principles of long-term horizon, and global diversification to hedge against local market downturns. The endowment capital is allocated in instruments like stocks, debt, real estate, venture capital, hedge funds and private equity.
6. Massachusetts Institute of Technology
Value: $24.6 billion
Massachusetts Institute of Technology, or MIT, is one of the premier private research universities in the United States. It is the sixth on the list of biggest endowments in the US and their investments. MIT's endowment value stands at $24.6 billion after a return of -5.6% in the fiscal year 2022, which fared slightly better than the academic endowment average return of the same period.
Its fund held a position in seven equity securities in Q3, 2022. The top three include Coupang, Inc. (NYSE:CPNG), Snowflake Inc. (NYSE:SNOW) and Boston Omaha Corporation (NYSE:BOC). Coupang, Inc. (NYSE:CPNG) was its top holding, with shares worth $400 million.
MIT’s endowment is managed by MIT Investment Management Company (MITIMCo), which comprises a team of professional asset managers. The fund considers investment time horizons that are measured in decades and is primarily focused on private equity.
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Disclosure: none. 15 Biggest Endowments in the US and Their Investments is originally published on Insider Monkey.
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