Highlights of 2004 NACUBO Endowment Study

Mimi Lord, TIAA-CREF Institute

April 2005 |

Traditional U.S. and international equities performed well and domestic bonds performed poorly in fiscal 2004, thus rewarding college and university endowments with large allocations to the former and small allocations to the latter. Overall, institutions participating in the 2004 NACUBO Endowment Study experienced average returns of 15.1%, a welcomed result after three very difficult years. Other highlights of the study, which is administered by TIAA-CREF on behalf of NACUBO, include:

  • Six of the top-10 performing institutions in 2004 had endowments of less than $100 million. Over long-term periods, however, large endowments with more than $1 billion tend to perform better than small endowments.
  • Endowments continue to invest larger percentages in alternative investments. Of the $267 billion assets in the study, $68 billion were invested in alternatives, led by hedge funds, $39.2 billion; private equity, $9.3 billion; and venture capital, $8.3 billion.
  • The trend of endowments turning to external managers continues. From 2000 to 2004, the percentage of overall endowment assets managed internally has declined from 17.5% to 11%.
  • The average spending rate declined slightly in fiscal 2004, from 5.1% to 5.0%, following four years of increasing rates.

© 2014 and prior years, Teachers Insurance and Annuity Association - College Retirement Equities Fund (TIAA-CREF), New York, NY 10017