STANFORD’S 13.1% ANNUAL GAIN FUELED BY STOCK PERFORMANCE

Stanford University joined more than two dozen large college endowments in crediting strong investment gains in fiscal 2017 to the performance of public equity markets.

Stanford’s return was 13.1 percent, and the value of the merged pool of investments was $26.9 billion, Stanford said in a statement. The school’s fiscal year ends in August but a return was provided for the year through June 30 to offer comparisons for when most college funds report.

Although public equities comprise only a quarter of the total portfolio, stocks “led our result with very strong absolute and relative performance,” Robert Wallace, chief executive officer of Stanford Management Co. said in the statement.

Many college funds are reporting double-digit gains after posting losses in the prior year. The average increase for more than 400 endowments and foundations in fiscal 2017 was 12.7 percent, according to data by Cambridge Associates.

The University of Rochester, Boston College, Brown University and Dartmouth College were among large college funds to attribute their returns to robust stock market performance.

In fiscal 2016, Stanford had the fourth-largest university endowment. Since joining in March 2015, Wallace has overhauled the fund’s operations and replaced senior managers and other staff.

Stanford said its five-year annualized return as of June 30 was 9.5 percent; and 5.8 percent for 10 years. The performance outpaces 7.7 percent and 4.4 percent average gains, respectively, for more than 400 endowments and foundations, according to Cambridge.

The California university’s one-year return beats some Ivy League schools that the fund is compared with even though Stanford isn’t part of the eight-member group. The trailing Ivies include Harvard University, which had a 8.1 percent increase, and Cornell University, which returned 12.5 percent.

Stanford’s merged pool is the principal fund for investing the university’s endowment and includes capital reserves of Stanford Health Care and Lucile Packard Children’s Hospital Stanford, along with other funds, according to the statement. The value of the endowment was $24.8 billion on Aug. 31. An endowment value as of June 30 wasn’t provided.

Asset allocations and performance by asset class for fiscal 2017 weren’t disclosed in the statement. As of June 30, 2016, private equity was the largest asset allocation target at 26 percent for the merged pool.

Private equity was Stanford’s top performing asset class over the decade through June 30, 2016, returning almost 12 percent on average per year and beating a benchmark return of about 10 percent, according to an annual report. This year’s annual report hasn’t yet been published.

Source: Bloomberg

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