Stanford University today announced a -4.2% return on investment 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 primary investment vehicle for the university’s endowment.
Stanford’s performance topped the -6.3% median return for US college and university endowments for the year, as reported by Cambridge Associates. A typical “70/30” passive portfolio of global equities and high-quality US bonds generated a return of -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 from Stanford Health Care and Stanford’s Lucile Packard Children’s Hospital, as well as other long-term funds.
The value of the university’s endowment, which includes about 75% of the merged pool as well as other assets such as real estate, was $36.3 billion as of August 31, 2022, its fiscal year-end. The endowment is intended to support university programs over the long term, and one installment each year provides essential support for day-to-day operations.
In fiscal year 2022, the endowment disbursed $1.5 billion to support vital university programs and financial aid. The endowment payment funded more than 21% of the university’s operating expenses in 2022. Over the past two years, an additional $447 million has been withdrawn from the endowment to address shortfalls and expenses related to COVID. For fiscal year 2023, the endowment payout is budgeted at $1.75 billion. The endowment must grow with inflation to maintain its purchasing power and sustain the university’s and donors’ commitment to students, faculty, and projects for decades to come.
“Diversification and disciplined management of the portfolio helped preserve value against the equity and credit markets, which have corrected sharply after their very significant rise over the past year,” said Robert Wallace, Managing Director. general of the Stanford Management Company. “It seems prudent to expect continued financial market volatility amid economic uncertainty and a changing interest rate environment.”
Stanford’s five- and 10-year annualized net investment returns of 10.9% and 10.2%, respectively, compare to median college and university endowment returns of 8.4% and 8.1% on the same periods.
The endowment includes more than 7,700 funds created by philanthropic donors over the years and designated for specific purposes. They support scholarships and also advance particular fields of study through chairs, fellowships, and research funds.
Stanford Management Company invests the endowment and other financial assets to provide long-term support for the university. Careful management of endowment funds helps ensure that significant resources, including financial aid, are available for current 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 investments in the United States and around the world.