The median result for endowments and foundations in the fiscal year ended June 30 was a 7.8% loss, according to a preliminary estimate by Cambridge Associates—the worst showing since 2009. Some endowment chiefs and advisers said the returns likely would have been even worse if venture-capital and private-equity valuations fully reflected the deep declines in public markets, a potential overhang on future performance.
Surging venture-capital returns boosted large endowments’ returns the prior year, ushering in a raft of expanded financial-aid initiatives and other programs despite the fact that some of the gains were unrealized.
Endowments also help fund faculty salaries and capital projects. “If this continues for another year there will be impacts,” said Margaret Chen, global head of Cambridge’s endowments and foundations practice.
Still, she said endowments were cushioned from steeper losses by diversification in their portfolios, which beyond public and private equity and fixed income often include hedge funds, real estate, private credit and cash. A benchmark portfolio made up of 70% global stocks and 30% Bloomberg Aggregate bond index lost 13.8% for the period, according to Cambridge.