Stanford FY23 financial performance - Printable Version
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Stanford FY23 financial performance - 82lsju - 11-13-2023
Quote:Stanford announced a 4.4% return on investment in its Merged Pool for the 2023 fiscal year on Oct. 12. The Merged Pool consists of a majority of the University’s endowment, funds from Stanford Health Care and Stanford Medicine Children’s Health and additional long-term reserves of the University.
This fiscal year’s gains contrasted with the 4.2% investment loss from the last fiscal year, signifying a steady recovery. However, the gains remain below the 10.84% mean returns over the past 10 years and the 40.1% returns from the 2021 fiscal year.
...
Stanford News reported that this year’s Merged Pool was valued at $40.9 billion as of June 30. The endowment, consisting of approximately 75% of the Merged Pool and additional assets, was $36.5 billion on Aug. 31, the end of the 2023 fiscal year.
The University’s growth still trailed behind the 6.9% median return for U.S. college and university endorsements for the year, preliminarily stated by Cambridge Associates. Additionally, a typical “70/30” passive portfolio of global stocks and bonds returned 10.9% during the 2023 fiscal year.
ADDING the link to the article
https://stanforddaily.com/2023/11/13/stanford-reports-steady-growth-in-2023-return-on-investment-after-2022s-negative-returns/
RE: Stanford FY23 financial performance - SkiBum80 - 11-13-2023
(11-13-2023, 09:03 AM)82lsju Wrote:So they made less than current Treasuries and the portfolio advisers charged how much to render this expert investing management?Quote:Stanford announced a 4.4% return on investment in its Merged Pool for the 2023 fiscal year on Oct. 12. The Merged Pool consists of a majority of the University’s endowment, funds from Stanford Health Care and Stanford Medicine Children’s Health and additional long-term reserves of the University.
This fiscal year’s gains contrasted with the 4.2% investment loss from the last fiscal year, signifying a steady recovery. However, the gains remain below the 10.84% mean returns over the past 10 years and the 40.1% returns from the 2021 fiscal year.
...
Stanford News reported that this year’s Merged Pool was valued at $40.9 billion as of June 30. The endowment, consisting of approximately 75% of the Merged Pool and additional assets, was $36.5 billion on Aug. 31, the end of the 2023 fiscal year.
The University’s growth still trailed behind the 6.9% median return for U.S. college and university endorsements for the year, preliminarily stated by Cambridge Associates. Additionally, a typical “70/30” passive portfolio of global stocks and bonds returned 10.9% during the 2023 fiscal year.
The passively managed S&P 500 etf "SPY" 1 year return is over 13%
Expense ratio is 0.09% and wonder how that compares to Stanford's actively managed portfolio.
Reminds me that active compared to passive is not always a winner if active is actively moving in the wrong direction.
RE: Stanford FY23 financial performance - 82lsju - 11-13-2023
(11-13-2023, 09:07 AM)SkiBum80 Wrote:(11-13-2023, 09:03 AM)82lsju Wrote:So they made less than current Treasuries and the portfolio advisers charged how much to render this expert investing management?Quote:Stanford announced a 4.4% return on investment in its Merged Pool for the 2023 fiscal year on Oct. 12. The Merged Pool consists of a majority of the University’s endowment, funds from Stanford Health Care and Stanford Medicine Children’s Health and additional long-term reserves of the University.
This fiscal year’s gains contrasted with the 4.2% investment loss from the last fiscal year, signifying a steady recovery. However, the gains remain below the 10.84% mean returns over the past 10 years and the 40.1% returns from the 2021 fiscal year.
...
Stanford News reported that this year’s Merged Pool was valued at $40.9 billion as of June 30. The endowment, consisting of approximately 75% of the Merged Pool and additional assets, was $36.5 billion on Aug. 31, the end of the 2023 fiscal year.
The University’s growth still trailed behind the 6.9% median return for U.S. college and university endorsements for the year, preliminarily stated by Cambridge Associates. Additionally, a typical “70/30” passive portfolio of global stocks and bonds returned 10.9% during the 2023 fiscal year.
The passively managed S&P 500 etf "SPY" 1 year return is over 13%
Expense ratio is 0.09% and wonder how that compares to Stanford's actively managed portfolio.
Reminds me that active compared to passive is not always a winner if active is actively moving in the wrong direction.
usually the head of SMC is among the highest paid University employees.....
from the release from the University on longer term returns
Quote:Stanford’s five- and 10-year net annualized investment performance of 9.5% and 9.4%, respectively, compares with the median college and university endowment return of 8.0% and 7.6% over the same time periods. A typical “70/30” passive portfolio returned 5.8% and 6.6% over the last five and 10 years, respectively.
“Strong results in most asset classes during the past year were partially offset by losses in our venture capital and growth equity portfolios, continuing a correction that began in 2022,” said Robert Wallace, chief executive officer of Stanford Management Company.
https://news.stanford.edu/2023/10/12/stanford-university-reports-return-investment-portfolio-value-endowment-2/
RE: Stanford FY23 financial performance - qwerty49 - 11-13-2023
(11-13-2023, 09:07 AM)SkiBum80 Wrote:(11-13-2023, 09:03 AM)82lsju Wrote:So they made less than current Treasuries and the portfolio advisers charged how much to render this expert investing management?Quote:Stanford announced a 4.4% return on investment in its Merged Pool for the 2023 fiscal year on Oct. 12. The Merged Pool consists of a majority of the University’s endowment, funds from Stanford Health Care and Stanford Medicine Children’s Health and additional long-term reserves of the University.
This fiscal year’s gains contrasted with the 4.2% investment loss from the last fiscal year, signifying a steady recovery. However, the gains remain below the 10.84% mean returns over the past 10 years and the 40.1% returns from the 2021 fiscal year.
...
Stanford News reported that this year’s Merged Pool was valued at $40.9 billion as of June 30. The endowment, consisting of approximately 75% of the Merged Pool and additional assets, was $36.5 billion on Aug. 31, the end of the 2023 fiscal year.
The University’s growth still trailed behind the 6.9% median return for U.S. college and university endorsements for the year, preliminarily stated by Cambridge Associates. Additionally, a typical “70/30” passive portfolio of global stocks and bonds returned 10.9% during the 2023 fiscal year.
The passively managed S&P 500 etf "SPY" 1 year return is over 13%
Expense ratio is 0.09% and wonder how that compares to Stanford's actively managed portfolio.
Reminds me that active compared to passive is not always a winner if active is actively moving in the wrong direction.
I suppose it's easy for us to MMQB, but I have to agree that this just doesn't seem right. I would hope that the total compensation for portfolio management included some element that was performance based -- and relative to complete passivity.
When I was living and working in Asia there was a local phrase for people who out-thought themselves in their decisions: they were "too smart." Whatever, I'm glad managing a $40B portfolio is not my responsibility.
RE: Stanford FY23 financial performance - chrisk - 11-13-2023
The head of SMC would say they are investing for the long term. But the current year could still be weak, because the large concentration in private equity and venture capital will continue to reduce valuations and are not likely to make a significant turnaround by next June 30.
RE: Stanford FY23 financial performance - TrumpCard - 11-13-2023
This thread prompted me to look at the performance of the other top university endowments. Apparently they underperformed the market as well. Harvard returned 2.9%, Yale 1.8%, and Princeton -1.7%. I am not too concerned about the short term underperformance, however. I have no insight into the holdings of these endowments, or the reasons that university endowments might have underperformed the market, but I suspect all these universities have well-managed endowments that all will do fine over the long term.
RE: Stanford FY23 financial performance - Softball Fan - 11-13-2023
https://smc.stanford.edu/our-team/
The Stanford Management Company has 59 employees. That seems bloated to me. It's not like these people are trading stock options and commodity futures on a daily basis. What do they do all day?
And most of the actual investment decisions are made by external partners; not SMC.
https://smc.stanford.edu/our-partners/
RE: Stanford FY23 financial performance - chrisk - 11-13-2023
They have a lot of external managers to manage. Supposedly, the current CEO has slashed the number of external managers and reduced the number of internal employees.
About 20 of the staff are considered investment managers.
From their 2021 report:
Beginning in mid-2015, SMC initiated a substantial and ongoing effort to consolidate and upgrade
its external partner roster to enhance performance relative to benchmark results. Our efforts include
building fewer, more substantial positions with partners that demonstrate superior investment
judgment, thorough processes, sound ethics, and a strong alignment of interests with the
University. A concentrated set of investment partners brings the additional benefit of more frequent
communication, leading to more fruitful and trustful partnerships. A better understanding of our
partners’ work allows us to invest with conviction and contrarianism. These efforts have added
greatly to results in the last six years, and we believe they will continue to do so into the future.
RE: Stanford FY23 financial performance - washingtonismoney - 11-13-2023
Of course it's harder to make outsized returns the larger your portfolio...still, it is funny my high-yield savings account outearned the endowment.
RE: Stanford FY23 financial performance - gocard14 - 11-13-2023
paloalto dateline='[url=tel:1699914526' Wrote: 1699914526[/url]']
https://smc.stanford.edu/our-team/
The Stanford Management Company has 59 employees. That seems bloated to me. It's not like these people are trading stock options and commodity futures on a daily basis. What do they do all day?
And most of the actual investment decisions are made by external partners; not SMC.
https://smc.stanford.edu/our-partners/
Analyze deals and options?
They might look at and vet 20 investments before making one. Then make investments, term sheets, lawyers, etc. That's a lot of leg work, and expensive. Which is why active management always has a hurdle to overcome to beat passive.
For individuals, passive investing makes way more sense. For institutions with massive endowments, active allows for more options, greater diversification; and possibly higher returns at the expense of higher costs and reduced liquidity.
RE: Stanford FY23 financial performance - fullmetal - 11-14-2023
My personal investments have also beat SMC's results for the past year...by a lot. However, I'm not locked into certain long-term investments like SMC is. Ditto about not wanting to MMQB this, but...huh.
RE: Stanford FY23 financial performance - oldalum - 11-14-2023
one year is too short a period to evaluate any longterm investment strategy. And therefore, too short a period on which to base performance-based pay.
RE: Stanford FY23 financial performance - needle - 11-14-2023
(11-14-2023, 01:20 PM)oldalum Wrote: one year is too short a period to evaluate any longterm investment strategy.
Look at the data below. I'd be willing to bet that more years than not, the Stanford university endowment underperforms index funds.
The chart linked below shows the average 10-year, 5-year, 3-year and 1-year return on investment for endowments over $1 billion (top line).
For the 3-year, 5-year and 10-year periods, the returns for endowments are below the ROI for the S&P 500 (see the Relative Indices section toward the bottom of the page).
https://imgur.com/a/5f158Q1
https://imgur.com/m5YGgRA
True, Stanford's endowment is much greater than $1 billion, so I can't say for sure whether Stanford's approach is substantively different than what's true of this aggregated data. But I just don't have confidence in any one institution to consistently outperform its peers when it comes to this kind of thing.
RE: Stanford FY23 financial performance - 82lsju - 11-14-2023
(11-14-2023, 02:32 PM)needle Wrote:(11-14-2023, 01:20 PM)oldalum Wrote: one year is too short a period to evaluate any longterm investment strategy.
Look at the data below. I'd be willing to bet that more years than not, the Stanford university endowment underperforms index funds.
The chart linked below shows the average 10-year, 5-year, 3-year and 1-year return on investment for endowments over $1 billion (top line).
For the 3-year, 5-year and 10-year periods, the returns for endowments are below the ROI for the S&P 500 (see the Relative Indices section toward the bottom of the page).
https://imgur.com/a/5f158Q1
https://imgur.com/m5YGgRA
True, Stanford's endowment is much greater than $1 billion, so I can't say for sure whether Stanford's approach is substantively different than what's true of this aggregated data. But I just don't have confidence in any one institution to consistently outperform its peers when it comes to this kind of thing.
the Daily article has a chart with the last 17 years performance here
https://stanforddaily.com/2023/11/13/stanford-reports-steady-growth-in-2023-return-on-investment-after-2022s-negative-returns/
RE: Stanford FY23 financial performance - Softball Fan - 11-14-2023
I understand you can't look at one year in isolation. However in 2008/2009 the return was negative 27%. I question what kind of diversification of investments would lead to that kind of dramatic loss. When you lose 27% of your principle in one year it takes a lot to recover from that.
The value of the endowment was lower in 2011/2012 than it was in 2006/2007.
RE: Stanford FY23 financial performance - oldalum - 11-14-2023
(11-14-2023, 02:32 PM)needle Wrote: For the 3-year, 5-year and 10-year periods, the returns for endowments are below the ROI for the S&P 500no major institution would invest 100% of its endowment in equities because there would be too much volatility. They count on spending some amount each year from the endowment, and in a down year they wouldn't want to have to sell too much to do so. The SMC compares its performance (favorably) to a 70/30 equity/bonds index benchmark. I don't see any way to know how close that approximates its actual investments, but it's probably not too far off. The pie chart shows fixed income and cash are about 9% of investments, "real assets" about 11%, and "Absolute Return" 18% which probably has some bonds-like components. The rest is equity, which is overall probably somewhere between 62% and 80%.
(BTW I'm not against index investing, for equities I'm a nearly 100% index investor myself)
(11-14-2023, 03:42 PM)paloalto Wrote: in 2008/2009 the return was negative 27%.That's actually the change in the value of the endowment from the beginning of the fiscal year to the end, which reflects return on investment minus money spent from the endowment on operations. So the return on investment was maybe around -23%. But your point is well taken, that is more downside volatility than desired!
RE: Stanford FY23 financial performance - TrumpCard - 11-14-2023
Per Forbes, the Stanford endowment's 10-year average annualized return is 9.4%, which is a bit above the average for endowments of 1 billion-plus, according to the chart linked above. https://www.forbes.com/sites/michaeltnietzel/2023/10/13/stanford-and-yale-endowment-returns-are-up-while-mit-and-duke-see-losses-again/
I don't see Stanford's 20-year average annualized return from a quick google search, but it appears that the Yale endowment's is a bit better than the S&P500. I think I've read that Yale gets notoriously good returns though. In any event, Stanford has been doing just fine over the long run in absolute terms and in relative terms compared to most of the competition. I'm not saying it's time to get complacent. I'm just saying that the top line results -- absent some information that the investment managers are operating inefficiently/imprudently -- are not a basis to be particularly critical.
RE: Stanford FY23 financial performance - oldalum - 11-14-2023
The SMC's 2022 annual report says the 10-year annualized return was 10.2% (versus 6.6% for the 70/30 index benchmark) and the 20-year annualized return was 10.0% (versus 6.5% for the 70/30). [2022 Annual Report, p. 14]
RE: Stanford FY23 financial performance - CowboyIndian - 11-14-2023
(11-14-2023, 03:42 PM)paloalto Wrote: When you lose 27% of your principle in one year it takes a lot to recover from that.
I assume you're referring to MTL, Persis Drell and Varsity Blues.
RE: Stanford FY23 financial performance - chrisk - 11-14-2023
(11-14-2023, 03:01 PM)82lsju Wrote:The chart toward the end of the article shows that Stanford’s return this last eyear rand 2nd of 11 peer institutions, lagging only Columbia.(11-14-2023, 02:32 PM)needle Wrote:(11-14-2023, 01:20 PM)oldalum Wrote: one year is too short a period to evaluate any longterm investment strategy.
Look at the data below. I'd be willing to bet that more years than not, the Stanford university endowment underperforms index funds.
The chart linked below shows the average 10-year, 5-year, 3-year and 1-year return on investment for endowments over $1 billion (top line).
For the 3-year, 5-year and 10-year periods, the returns for endowments are below the ROI for the S&P 500 (see the Relative Indices section toward the bottom of the page).
https://imgur.com/a/5f158Q1
https://imgur.com/m5YGgRA
True, Stanford's endowment is much greater than $1 billion, so I can't say for sure whether Stanford's approach is substantively different than what's true of this aggregated data. But I just don't have confidence in any one institution to consistently outperform its peers when it comes to this kind of thing.
the Daily article has a chart with the last 17 years performance here
https://stanforddaily.com/2023/11/13/stanford-reports-steady-growth-in-2023-return-on-investment-after-2022s-negative-returns/
Duke, Princeton, and MIT posted negative returns.