The University performed poorly among the Ivy League institutions in endowment returns, according to the 2015-2016 fiscal report released Thursday.

The University performed poorly among the Ivy League institutions in endowment returns, according to the 2015-2016 fiscal report released Thursday.

October 2, 2016

Cornell’s $6.1 Billion Endowment Posts Negative Return, Lowest of 5 Ivies

Print More

Cornell announced Thursday that its $6.1 billion dollar endowment has posted a return of negative 3.3 percent in the 2015-2016 fiscal year. The University’s endowment performance is the worst of the five Ivy League schools that have reported returns so far.

Only Yale has posted a gain for the year, climbing 3.4 percent, while Harvard, University of Pennsylvania and Dartmouth have posted losses of 2 percent, 1.4 percent and 1.9 percent, respectively.

“We recognize the importance of the endowment for the University’s financial interests and its research, faculty and students,” said Donald Opatrny ’74, the chair of the Investment Committee in a statement. “Moving forward we are proactively examining, given this low-return environment, how to optimize the endowment.”

One of the proactive moves the University will make is to move the Office of University Investments to New York City from its current location in Ithaca.

The move was announced on Friday after being recommended at the Investment Committee’s Sept. 7 meeting and recieving the stamp of approval from Interim President Hunter Rawlings a week later.

The move represents an effort to attract more potential employees who may not be willing to move to Ithaca, according to Joann DeStefano, Cornell’s chief financial officer.

“The Investment Committee believes over the long term the relocation to New York City gives us even better access to potential staff who might not be willing to move to Ithaca,” she said in a statement. “We’ve had great staff hires, but this move will expand the population of potential candidates. And it puts us closer to the world capital markets.”

Kenneth Miranda, the University’s fourth chief investment officer since 2010, added that the move is in the long-term interest of Cornell even if the “full merits will take time to achieve.”

Although office space and salaries in New York City would be more expensive, DeStefano added that a 10-basis point increase in endowment returns would more than cover the difference in cost.

  • Importance of competitive investment performance

    Rather than continually enrolling more students to generate tuition income, Cornell needs to fix the management of its endowment. Every 1% return on the endowment generates $61 million, the equivalent of the tuition paid by 1200 students receiving no financial aid.

    • Wantmoneysobad

      ^ this

  • Getting close to NYC shysters is no way to it improve investment returns except theirs. Whoever thought of that should be fired immediately. A penny saved is a penny earned when it comes to investments. Call Vanguard. 1-877-662-7447

  • Hotelie Alum

    Having been in the investment business for two decades, I’ve heard that argument about where the office is located, and getting people to work/visit there. That’s a smokescreen and deflection. Wake up! The S&P 500 is up 11% over the past 52 weeks, and there has been a strong rally in various sectors of the bond market (e.g., high yield, corporates, Treasuries). These dorks have to work at it to lose money in this environment. What are they in? Probably a group of hedge funds managed by clueless clowns taking the wrong side in their betting on yesterday’s weather.

    Print this out, Cornell investment folks: invest in a well-diversified portfolio that will generate income and some capital gain. Buy only that which you can sell easily. Seek the lowest transaction costs possible. If you don’t understand it and/or cannot explain it to the typical student on campus, don’t buy it. Reduce the standard deviation of returns. If you’re paying ‘two and twenty’ you will be asked to leave the organization.

  • Cornell Alum ’93

    (1) One’s stock portfolio has up years and down years. A year of – 3% can be followed by a year of +7% or +10%. What matters is the overall long term (5, 10, 15, 20, 30 or more years) performance and not the returns in any given one year period.
    (2) That being said, I don’t understand why even the big and fancy endowments don’t just put their money in a well diversified bunch of Vanguard/Fidelity index funds, which most studies show, tend to beat all the “experts” anyway, in the long term. There are many studies that have proven this. In fact, I’d bet many of those studies were performed by Cornell.

    • Another Alum

      I was going to comment the exact same thing. This was one of the big take aways from my Finance class and when you look at the FIRE crowd like MMM et al it clearly works way better than the returns I’ve seen Cornell get since I was a student. I’m just an engineer and I literally get better returns with my own money with like zero effort.

  • Wantmoneysobad

    ^ this
    Id like to add that cornell has been underforming other institutions in a big way in the past decade.

    • Pretty Dog Shit Returns

      Yup, the endowment has been blowing gas out its ass for the better part of a decade

  • AAP ’17

    Wondering why this news is acceptable, when students have been calling for divestment measures for years (from fossil fuels, prisons, etc) and been consistently turned away, told that their demands were too ‘financially risky’. The Investment Committee has cited its ‘fiduciary’ responsibility to guarantee positive returns on the endowment as a rationale against divestment, again and again. And yet… this is allowed? I don’t think the students calling for more financial integrity are the ones who are gambling.

    • Cornell Alum ’06

      To paraphrase Nathaniel Davis in the NYTimes, if war can have ethics, investing can, too. Particularly if these clearly unethical investments aren’t paying off.

  • Cornell Alum ’93

    Students and alumni are not owners of Cornell. We are customers, usually for just 4 year periods. It’s not for us to have a say in how Cornell manages/invests its money for the long term needs (looking ahead 20, 30, 40 or more years) of the university. If you buy a cup of coffee from the coffee shop down the street, it’s none of your business to judge the coffee shop owner as to where he/she invests his/her profits. It’s his/her business to plan/invest wisely or poorly… to his/her benefit or peril.

    • Another Alum

      Does the coffee shop call you up and send emails asking you to donate years after you bought one random cup of coffee?
      Do you pay hundreds of thousands of dollars for coffee?

      • Cornell Alum ’93

        Just because they call you for donations doesn’t mean you have to give anything. But, if you do… once you’ve given your GIFT, Cornell, the RECIPIENT of your GIFT, can invest it however they see fit, which is usually based on what they think will perform best (no one has a crystal ball to determine what will perform best in the upcoming year)… shares of Microsoft, Home Depot, gold, wheat, soybeans, land, etc.

        • Alum 08

          Well, we donate to hope school’s rank stays up thus gives alumni sense of pride…and hope the Cornell brand name = terrible at financial decisions….

  • Rob

    If you express the change in dollars rather than percent, Harvard had the biggest loss.

    • Another Alum

      Percents are what matter when it comes to investment performance.

  • You are what your record is

    Cornell’s investment underperformance is not just a fiscal 2016 event. A recent Walll Street Journal story indicated that Cornell’s returns for the last decade was lowest in the Ivies.

    • Cornell Alum ’93

      Cornell is not investing your portfolio for you. They are investing Cornell’s portfolio for Cornell. None of this is any of our concern. Whether they do great or horribly is not newsworthy and certainly none of our business to complain about. We are customers (students) and former customers (alumni). We do not “own” shares of some company called Cornell. We are not shareholders with voting rights. However… If you hire a financial advisor to manage your personal money and you are unhappy with how he/she has managed your portfolio, then by all means, complain, move your money elsewhere, etc. This is not a similar situation.

      • Show me the money

        Cornell frequently solicits its alums, parents of current students, & friends to raise money to fund the university. Should we not care how successful our university is investing our dollars?

        • Cornell Alum ’93

          That’s correct. Once you’ve GIFTED the money, it’s no longer yours. If you then don’t like how your money was used, you don’t have to GIFT again in the future.

      • Another Alum

        Alumni vote for members of the board of trustees and what not. That’s exactly analogous to being a shareholder. Instead of monetary ownership, we are co-owners of the Cornell “brand” so to speak and its corresponding value in the labor market.

        • Cornell Alum ’93

          Cornell has been around over 150 years (!). It has a world-renowned reputation for the high quality of students who go there and for the education it provides to those students. People reading the name “Cornell” on the resume of a job seeker do not investigate or care how Cornell’s stock portfolio performed over the past 1 (!) year. Furthermore, in the grand scheme of things, all this article means is that for every $100 that each of these universities invested in a one year period, Cornell now has $97, Harvard $98, Dartmouth $98, UPenn $99 and Yale $103. This is hardly news. And, next year, it may be the opposite. And the following year, Cornell may be in the #1 position. None of this is news. The article is pointless. It’s meant to create drama where there is no drama.

  • Pingback: Notes from the Alumni Association | Big Red Bands Alumni Association()