Stanford University today announced a 4.4% investment return on its Merged Fund, net of all external and internal costs and fees, for the year ending June 30, 2023. The Merged Fund is the primary investment vehicle for the university endowment.
Stanford's performance lagged the average performance of 6.9% of endowments at American colleges and universities during the year, Cambridge Associates preliminarily reported. A typical โ70/30โ passive portfolio of global stocks and high-quality U.S. bonds returned 10.9% over the same period.
Stanford's five- and 10-year annualized net investment returns of 9.5% and 9.4%, respectively, compare to average college and university endowment returns of 8.0% and 7.6% during the same periods. A typical โ70/30โ passive portfolio returned 5.8% and 6.6% over the past five and 10 years, respectively.
"Strong results across most asset classes over the past year were partially offset by losses in our private equity and growth equity portfolios, continuing a correction that began in 2022," said Robert Wallace, director executive at Stanford Management Company. "Seen over several years, our disciplined and diversified investment approach has generated attractive returns with moderate volatility."
The value of the merged pool was $40.9 billion as of June 30, 2023. The fund also includes capital reserves from Stanford Health Care and Stanford Medicine Children's Health, along with other long-term funds.
The value of the university's endowment, which includes about 75% of the merged common fund as well as other assets such as real estate, was $36.5 billion as of Aug. 31, 2023, the end of its fiscal year. The gift is intended to sustain university programs over the long term, and a payment each year provides critical support for current operations.
In fiscal year 2023, the fund disbursed $1.7 billion to support vital academic programs and financial aid. The endowment payment funded more than 22% of the university's operating expenses in 2023. For fiscal year 2024, the endowment payment is budgeted at $1.8 billion. The endowment must grow with inflation to maintain its purchasing power and support the university's and donors' commitment to students, faculty, and projects for decades to come.
The endowment includes more than 7,900 funds established by philanthropic donors over the years and designated for specific purposes. They support scholarships for students and also promote particular fields of study through professorships, fellowships, and research funds.
Stanford Management Company invests equity and other financial assets to provide long-term support to the university. Careful stewardship of donated funds helps ensure that important resources, including financial aid, are available to 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 to achieve disciplined, long-term investments in the US and around the world.
