October 3, 2018

Cornell Endowment Posts Second Worst Returns in Ivy League So Far

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This post has been updated.

Cornell’s endowment increased 10.6 percent in fiscal year 2018, the second worst returns out of the Ivy League schools that have announced results so far.

This year’s increase ranks just ahead of Harvard, which has also experienced subpar endowment returns in the past few years. The Cambridge, Massachusetts school saw a 10 percent increase in its endowment in the last fiscal year, which runs from July 2017 to June 2018. Brown has posted the best result of the Ivies so far, with an increase of 13.2 percent.

Cornell’s increase also trailed the S&P 500, which increased about 12 percent. However, it beat the 8.3 percent median gain for 143 endowments of all sizes in the period, according to data by Cambridge Associates seen by Bloomberg.

In a statement, the University said this year’s gains were driven by private equity investments, global equities and enhanced fixed income.

Cornell trustee and chair of the board’s Investment Committee Girish Reddy M.Eng. ’78 MBA ’80 said in the statement that the University restructured its portfolios in the last 12 months, and “we continue to expect strong performance in fiscal year 2019 as the portfolios reap a full year’s benefit.”

The statement highlighted changes the investment office made this year to its portfolio strategy and management, including “revamping” its benchmarks and asset allocation, among other changes. It said the updates were intended to boost performance over time.

“Following deep-dive reviews, we’ve implemented an interrelated set of initiatives aimed at improving the portfolio’s strength and resiliency, and those began to come to fruition in fiscal year 2018,” said Kenneth Miranda, chief investment officer, in the statement. “We expect to continue to see the effects of those improvements as we move forward.”

The University also highlighted many changes last year, which Miranda referred to as a “transitional year.” Miranda took over at the beginning of last fiscal year, in which Cornell’s endowment returned 12.5 percent. The investment office also began its move from Ithaca to New York in an effort to attract more qualified candidates. This year’s statement highlights that the move is now complete.

In addition to Brown, Penn, Yale and Dartmouth saw higher endowment returns than Cornell this year, with gains of 12.9, 12.3 and 12.2 percent, respectively. Princeton and Columbia have not yet reported results.

“We have a relatively new chief investment officer who has moved our investment office to NYC and who is busy restructuring our investment portfolio,” said Ronald Gordon Ehrenberg, Director of the Cornell Higher Education Research Institute and Irving M. Ives Professor of Industrial and Labor Relations and Economics. “This restructuring necessarily takes time because it takes time to liquidate many of our endowment’s assets. So let’s wait a few years before judging how he is doing.”

In fiscal years 2015 and 2016, Cornell’s endowment posted returns of 3.4 percent and negative 3.3 percent, respectively. Both years Cornell had the worst returns in the Ivy League.