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University releases financial results addressing portfolio returns, endowment growth

DEVON NICOLE ZANDER/The Stanford Daily

Stanford released its annual financial results for the 2018 fiscal year on Thursday, which included a Stanford Management Company (SMC) statement on investment portfolio returns as well as the University’s announcement of its endowment value, according to a report released by Stanford News.

As per the results, Stanford’s endowment totaled $26.5 billion for the fiscal year ending Aug. 31, 2018, a $1.7 billion dollar increase since August of last year. Approximately $1.2 billion — or five percent of the total endowment — was allocated for financial aid and academic programs.

The purpose of the endowment is to financially provide for the University in perpetuity. Each year, about five percent of the endowment’s total value is used to fund approximately 20 percent of Stanford’s operating budget. The endowment does not consist of one single fund, but rather, over 7,000 individual gifts from donors. Nearly three-quarters of those gifts are restricted for certain purposes; for instance, money donated specifically to support financial aid cannot be used to fund research.

SMC also reported $3 billion in investment gains for the fiscal year ending June 30, 2018 (excluding all internal and external costs and fees). According to preliminary data from investment consulting company Cambridge Associates, that rate of return — 11.3 percent — exceeds the 8.3 percent generated by the average U.S. college or university.

According to SMC Chief Executive Officer Robert Wallace, the investment gains will help sustain Stanford’s educational and research efforts as well as support financial aid.

As the University’s investments office, SMC oversees Stanford’s Merged Pool, the $28.7 billion fund for investing Stanford’s endowment. The Merged Pool includes capital reserves of long-term funds such as Stanford Hospital and Lucile Packard Children’s Hospital.

Wallace indicated that this year’s investment returns were bolstered by value added in public equity portfolios — a sector the company has been working on upgrading for the past three years. However, performance in illiquid asset classes fell short of SMC’s expectations.

“Our efforts to reposition the illiquid asset classes are still in early stages and will require more time to complete,” Wallace said in a statement to Stanford News.

 

Contact Melissa Santos at melissasantos ‘at’ stanford.edu.

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