Investment Review from the Chief Investment Officer
The investment return for the Notre Dame Endowment Pool for the fiscal year ended June 30, 2018, was 12.2 percent, net of investment manager fees. The market value of the Endowment Pool grew to $13.11 billion at fiscal year end, up from $11.79 billion at June 30, 2017.
The private equity portfolio generated solid returns across all strategies. The generally positive performance of public equity markets around the world continued during the year, although there was a wide dispersion of returns in different markets. In addition to strength domestically, public equity managers in emerging markets produced strong absolute and relative returns for the University.
The investment performance of the Endowment Pool compared to benchmarks for the fiscal year, and for longer-term time periods covering various market cycles, is shown in the chart below. These results have been achieved while also giving great attention to reducing risk and dampening market volatility in light of the University’s reliance on consistent Endowment spending to support the University’s mission.
Endowment Pool Investment Performance
(Annualized returns net of fees)
Periods ended June 30, 2018
Notre Dame Endowment Pool returns are net of (reduced by) investment managers’ fees. The Strategic Policy Portfolio is Notre Dame’s internal benchmark consisting of indices representative of the target investment portfolio. The Trust Universe Comparison Service (TUCS) Large Fund Median is a compilation of returns of endowment, pension and foundation investors greater than $1 billion and thus provides a basis for comparison to the performance of large institutional investors generally. The 60/40 mix is an index blend of stocks/bonds as represented by the MSCI All Country World Investable Index and the Barclays Capital U.S. Aggregate Bond Index and thus is a measure of performance compared to a more traditional or retail portfolio.
Ongoing success over time will continue to be driven by adherence to our long-standing philosophies of diversification, investing in less efficient markets and areas outside of the public equity markets, and manager selection grounded in deep due diligence to identify excellence in each respective niche of the portfolio.
Endowment Pool Asset Allocation
As of June 30, 2018
Spending from the Endowment Pool during the fiscal year was $393 million, up from $368 million the prior year, which was an increase of 6.6 percent. Growth in annual spending over the last 20 years is shown in the accompanying chart, and cumulative spending during that period exceeded $4.2 billion.
Endowment Spending History
Fiscal year ended June 30
The ability to provide such a high level of financial support that has been so important to campus life over the last two decades, while at the same time growing the Endowment to provide for future needs, is directly attributable to sound long-term investment and spending strategies and to the generosity of the University’s donors.
Endowment Pool Market Value
As of June 30
Perhaps the most vital area supported by our benefactors is making a Notre Dame education more affordable for a large part of our student body. The biggest beneficiary of Endowment spending continues to be student financial aid, and Endowment spending for all purposes during the fiscal year equated to 26 percent of the University’s expenditures, which by itself reduces reliance on tuition.
Endowment Spending Purposes
Year ended June 30, 2018
This past year, our students, faculty, staff, and alumni celebrated the 175th anniversary of the founding of Notre Dame by Rev. Edward F. Sorin, C.S.C. The Endowment has been in existence for nearly 100 of those years and will be a key element of the University’s ongoing progress for the next 175 years and more. Many thanks to all of you who make this possible and who are assuring the attainment of Father Sorin’s vision that Notre Dame will be a “powerful means of doing good.”
Scott C. Malpass
Vice President and Chief Investment Officer