This study is based on a survey that Cambridge Associates administers annually to our college and university clients. The report that follows summarizes returns, asset allocation, and other investment-related data for 158 institutions for the fiscal year ended June 30, 2022. Included in this year’s report are commentary and exhibits that are spread across six separate sections.
Just one year after the best investment returns endowments had seen in decades, fiscal year 2022 brought about the most challenging market environment since the Global Financial Crisis of the late 2000s. Our Investment Portfolio Returns section highlights performance results for this past fiscal year, as well as longer trailing periods. This section includes our usual suite of analysis that investigates the drivers of investment performance and what made top performers stand out. Also included is commentary on private investment reporting methodologies and why this topic is particularly critical in the analysis of comparative peer returns reported this past fiscal year.
Despite the poor returns earned on an absolute basis in fiscal year 2022, many endowments performed quite well in relation to their policy portfolio benchmark. However, the composition of the benchmark, notably when it comes to how private equity is captured, was a significant factor in whether or not an endowment outperformed its benchmark and by how much. Our Investment Policy section touches on this topic and illustrates the most common components used for policy benchmarks. Relatedly, this section also includes insights into how asset allocation strategies among endowments can differ from a policy perspective.
CA has been conducting this survey for several decades and this gives us unique insights into trends in asset allocations over the long term. The Portfolio Asset Allocation section highlights how endowments have evolved in investing their portfolios from the early 2000s to today, with a particular focus on the increased equity exposure that endowments have taken on in recent years. This section also incorporates data on target asset allocations to lend insights into how institutions are altering their portfolios heading into the future.
The number of managers that endowments use for their overall portfolio and within specific asset classes can vary widely. Our Investment Manager Structures section explores data on this topic, as well as implementation strategies for traditional assets (i.e., active versus passive management) and alternative assets.
Meanwhile, the Institutional Support section contains analyses that highlight how much colleges and universities rely on their endowments to support their annual operating budgets. Also included in this section are exhibits on spending policies, portfolio inflows and outflows, operating funds, and endowment market values relative to outstanding debt.
Finally, our Investment Office Staffing and Governance section of the report takes a look at topics such as the number of personnel in the investment office and investment committee structure. Also included are analyses on how endowments use outside advisors/consultants and who has decision rights for asset allocation policy development and manager selection.