In 2023, Endowment Performance Was All About Dispersion

The smallest prevailed over the one-year period. But that doesn’t tell the full story.


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For university endowments, fiscal year 2023 performance was a tale of dispersion.

Endowments overall bounced back year-over-year, returning 7.7 percent on average, as compared to fiscal year 2022’s dismal average loss of 8 percent. “What a difference a year makes,” said Mark Anson, chief executive officer at Commonfund.

Digging deeper into the performance last year reveals that the average top performers were the smallest endowments with more exposure to public equities, according to the latest NACUBO-Commonfund Study of Endowments.

Released Thursday, the survey included performance details for 688 institutions representing a total of $839.1 billion in assets. The median institution size was $209.1 million.

This is the 50th anniversary of NACUBO’s endowment study. Since the organization began surveying endowments on their investing, portfolios have become more complex, shifting away from stocks and bonds and including significant allocations to private assets. As that complexity grew, more endowments began tapping outside asset managers and OCIOs. Once their portfolios and resources hit a critical mass, they began in-sourcing again.

But complexity didn’t pay off in fiscal year 2023 — even though it’s beneficial to universities in the long run.


Endowments with less than $50 million posted average annual returns of 9.8 percent, while the largest endowments — those that manage over $5 billion — posted average annual returns of 2.8 percent. Performance for the fiscal year ending in June 2023 incrementally drops as endowment size ticks up year-over-year.

That isn’t a reason to throw the endowment-model baby out with the bathwater. One year doesn’t tell the full story: Over the three-, five-, and ten-year periods, large endowments outperform significantly.

For the three-year period, endowments managing more than $5 billion averaged an annual 12.2 percent return. The smallest endowments averaged a 7.3 percent return. The pattern holds true for the five- and ten-year periods.

“I think the first thing is that, thank God, we got past 2022,” Anson said. “The markets began to return to normal. Point two is that 2022 is the gift that keeps on giving. Those returns will wash into the three- and five-year returns.”

The differences boil down to allocation. On average, the largest endowments have roughly six percentage points more allocated to equities, but that allocation is heavily concentrated in private equity, venture capital, and marketable alternatives in addition to stocks. Their smallest peers have more equities allocated to U.S. active managers and index funds. And these small endowments also have far more of their portfolios dedicated to fixed income — some 25.9 percent on average. Larger endowments have about 8.6 percent allocated to fixed income.

“Smaller endowments tend to have a much higher allocation to public equities,” Anson said. “What happened in 2023? The best-performing asset class was public equities.”