The school announced their endowment figures last week.
Northwestern’s endowment decreased from $11.08 billion to $10.8 billion in the 2019 fiscal year, after its long-term balance pool underperformed relative to expectations and a withdrawal to offset the University’s budget deficit.
The reduction marks only the second time in 10 years that the school’s endowment has decreased year-to-year and is the largest in that time frame. It remains higher than 2017’s $10.5 billion value.
The endowment, which is held in a policy portfolio primarily made up of private investments, absolute returns and US and international equity, gained $295 million last fiscal year, a growth of only 2.5 percent and an underperformance of 4.6 percent. Endowment spending far outpaced those gains. Primarily driven by spending toward the operating budget to compensate for the prior year’s deficit, $589 million was withdrawn from the endowment.
You don’t eat into your principal unless you have no choice.
University officials also want to restructure the endowment portfolio in coming years, investing more in high-yield credit, which currently only makes up 2.4 percent of holdings, and seek liquidity on some private investments, which are 26.4 percent of the portfolio — the largest investment category. Investment managers are targeting a 22 percent portfolio share for private investments, and attributed the overweight to strong performances and venture capital managers holding portfolio companies for longer periods of time. The endowment’s reliance on private investments has increased 6.3 percent since 2016.
Read more about Northwestern’s endowment here.
Post by Marcelino Pantoja