After a thirty-year record return last year, Cornell’s endowment reported a 1.3 percent investment loss, ending the 2022 fiscal year at $9.8 billion, according to the Office of University Investments. According to the release, the University endowment outperformed its strategic benchmark return of minus 5.1 percent.
Last year, the endowment climbed to $10 billion from just $7.2 billion in 2020, recording a 41.9 percent annual return. In a University press release, Chief Investment Officer Kenneth Miranda attributed this year’s 1.3 percent loss to market volatility stemming from the war in Ukraine, ongoing supply chain hurdles, inflation and tightening U.S. monetary policy. Given the economic backdrop, Miranda stated that this year’s returns are respectable relative to the environment.
“We position the portfolio for the long term to weather positive and negative years. Fundamental to our investment philosophy is an understanding that over our near-infinite time horizon, the endowment will confront all manner of expected and unexpected market conditions,” Miranda said.
The third quarter of 2022 saw ongoing volatility in equity and fixed income markets. The S&P 500 finished the quarter down 5.3 percent and is down 25 percent year to date, while the iShares Core U.S. Aggregate Bond exchange-traded fund was down 5.3 percent during the quarter and was down 16 percent year to date.
The University Investment Office supervises Cornell’s Long Term Investments. Most of the LTI’s actively managed assets are in the Long Term Investment Pool, which invests across stocks, bonds and other asset classes, such as real estate and private equity, with the objective of achieving a return of at least 5 percent in excess of inflation. Fifty-eight percent of the LTI is invested in equity while 18 percent is invested in real assets.
So far, only two other Ivy League schools have reported endowment returns for the 2022 fiscal year. Cornell’s endowment performed better than Dartmouth’s, which returned a 3.1 percent loss, falling from $8.5 billion to $8.1 billion. The University of Pennsylvania’s endowment saw a positive return that was less than 1 percent, climbing from $20.5 billion to $20.7 billion.
Cornell’s endowment consists of more than 8,000 individual accounts. Approximately 5 percent of earnings are distributed each year to support the University’s operating budget, funding initiatives like financial aid, research and faculty salaries. During the 2022 fiscal year, the endowment paid out $352 million.
Cornell has historically posted lower investment returns than the rest of the Ivy League but last year outperformed the University of Pennsylvania, Harvard and Yale — which reported 41.1 percent, 33.6 percent and 40.2 percent returns, respectively.
In the statement, Miranda noted that the endowment largely preserved last year’s gains, in part, due to his office’s work since 2016 to diversify the University’s investment portfolio, with respect to risk, sector and other criteria.
Despite ongoing market turmoil, which will likely persist through 2022, Miranda is confident that Investment Office’s restructuring and diversification efforts will allow the portfolio to weather the storm.
“The likelihood of an extended period of lower returns and geopolitical turmoil appears heightened,” Miranda said. “The broad diversification of the endowment is intended to provide resilience and support for the wide range of possible outcomes.”