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Post by princetoncrusader on Oct 25, 2023 20:48:22 GMT -5
Story on Bloomberg today notes that Princeton posted a return of -1.7%, due to poor performance in the VC part of the portfolio. WSJ from yesterday reports that MIT came in at -2.9% while Duke was at -1%. In contrast, endowments at Yale and Stanford gained 1.8% and 4.4%, respectively. When does HC report?
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Post by Pakachoag Phreek on Oct 26, 2023 9:33:46 GMT -5
Story on Bloomberg today notes that Princeton posted a return of -1.7%, due to poor performance in the VC part of the portfolio. WSJ from yesterday reports that MIT came in at -2.9% while Duke was at -1%. In contrast, endowments at Yale and Stanford gained 1.8% and 4.4%, respectively. When does HC report? I've been looking every day. An emerging, but not all that surprising, problem is that the endowment distributions have skyrocketed. Harvard has a goal of growing the endowment by eight percent annually. 3.5 percent of that is to cover inflation. 4.5 percent is to cover the annual distribution of the endowment for the operations of the university. In other words, eight percent annual growth represents a steady-state value. An example of this scale of the annual distribution is MIT. In 2022, MIT's appropriation (distribution) was $835 million. In 2023, the appropriation was $1,093 million In 2025, the appropriation will be about $1,140 million. (at a 4.5 percent distribution.) Between 2021 and 2023, the value of MIT's endowment dropped by $3.9 billion. MIT needs to reverse this decline or the annual appropriation will decrease significantly by 2026.
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Post by mm67 on Oct 26, 2023 18:47:36 GMT -5
They say the best thing in life are free but you can tell that to the birds & bees HC needs money. M-O-N-E-Y.
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Post by Pakachoag Phreek on Nov 2, 2023 10:11:20 GMT -5
Endowment value as of June 30, 2023 was $1.043 billion, an increase of $50 million, or 5 percent. The five percent increase in value outperforms many/most of the private institution endowments in the $1 billion category for fiscal year 2023, including a school in Chestnut Hill.
More later, when I'm not killing time in airport lounges.
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Post by newfieguy74 on Nov 2, 2023 13:09:22 GMT -5
Let's get to 2 Billion by 2040.
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Post by Pakachoag Phreek on Nov 2, 2023 15:18:28 GMT -5
Other Patriot League: Lafayette endowment up 4 percent Lehigh up 4 percent Georgetown up 2.8 percent Boston Univ. up one percent Colgate flat Loyola down -2.3 percent Fordham down -2.3 percent Bucknell not reported American not reported
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Post by Pakachoag Phreek on Nov 2, 2023 15:39:43 GMT -5
Let's get to 2 Billion by 2040. If the endowment grew at a steady state (no contributions, no distributions) rate of 4.5 percent annually for 17 years, the value in 2040 would be $2.117 billion. HC appropriated $40 million from the endowment for use in operations of the College in 2023, and increase of $5 million over fiscal 2022
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Post by princetoncrusader on Nov 2, 2023 20:12:42 GMT -5
Ahh but the true question is what is the return earned by the CIO at the various schools? Interesting that Lafayette has a full-time CIO, who I knew back in the 1990's when he was a young analyst at Morgan Stanley, while HC has totally outsourced the function.
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Post by KY Crusader 75 on Nov 3, 2023 8:29:27 GMT -5
Dismiss the managers and go to Index Funds
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Post by alum on Nov 3, 2023 11:15:01 GMT -5
Dismiss the managers and go to Index Funds A challenge to making this so is that the endowment is made up of hundreds (maybe thousands) of sub accounts which are temporarily or permanently restricted. The managers have to ensure that sufficient income is generated for designated purposes of each of these funds which can often be specific (summer internships in a particular area, for instance.) The different sub accounts might require different strategies. Having sufficient hedges against downturns in the market as a whole is also a responsiblity of the managers.
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Post by crusader12 on Nov 6, 2023 15:49:55 GMT -5
Dismiss the managers and go to Index Funds A challenge to making this so is that the endowment is made up of hundreds (maybe thousands) of sub accounts which are temporarily or permanently restricted. The managers have to ensure that sufficient income is generated for designated purposes of each of these funds which can often be specific (summer internships in a particular area, for instance.) The different sub accounts might require different strategies. Having sufficient hedges against downturns in the market as a whole is also a responsiblity of the managers. Correct, you need to have Private Equity, Private Credit, Hedged Strategies, Private Real Estate, infrastructure etc. in addition to index funds. Public markets have dominated private the last several years (expect 2022) which is why the endowment underperformed the S&P500. People forget 87% of business are privately held not publicly traded. The tide may be turning, time will tell. I'm sure looking at some longer duration bonds at 5% makes some sense as well.
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Post by Pakachoag Phreek on Nov 7, 2023 17:13:27 GMT -5
In fiscal 2023, $583 million of the endowment was invested in private equity and hedge funds. These had a small positive return. More than half the investment gains were in cash, cash equivalents, and fixed income investments. (As presented, these gains do not reflect the transfer of monies between asset categories during the year; e.g., moving investment gains in domestic equities to fixed income investments.)
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Post by KY Crusader 75 on Nov 7, 2023 17:19:48 GMT -5
Phreek--is there any way you could discern/estimate what management of the endowment costs us in total: salaries of managers, commissions, consulting fees, sales expenses on trades, etc?
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Post by Chu Chu on Nov 7, 2023 17:36:52 GMT -5
Endowment value as of June 30, 2023 was $1.043 billion, an increase of $50 million, or 5 percent. The five percent increase in value outperforms many/most of the private institution endowments in the $1 billion category for fiscal year 2023, including a school in Chestnut Hill. More later, when I'm not killing time in airport lounges. As I recall, this is a lot better than we have done in previous years. It is also notable that we appear to have done better than other institutions. I don't remember that being the case in the past. I seem to recall that we have had a change in investment advisors recently, and I wonder if these changes reflect that. Anyway, good news!
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Post by Pakachoag Phreek on Nov 7, 2023 18:35:20 GMT -5
Endowment value as of June 30, 2023 was $1.043 billion, an increase of $50 million, or 5 percent. The five percent increase in value outperforms many/most of the private institution endowments in the $1 billion category for fiscal year 2023, including a school in Chestnut Hill. More later, when I'm not killing time in airport lounges. As I recall, this is a lot better than we have done in previous years. It is also notable that we appear to have done better than other institutions. I don't remember that being the case in the past. I seem to recall that we have had a change in investment advisors recently, and I wonder if these changes reflect that. Anyway, good news! HC's five percent increase in endowment value was better than any IL school. The best IL performer was Columbia, whose endowment value increased by four percent. HYP all experienced decreases in endowment value in 2023. I believe I can confidently state that HC beating all the Ivies in 2023 is unprecedented. And HC beat BC as well!! BC's endowment value dropped by over $165 million. I do not know about a change of investment advisers. The Chief Investment Officer resigned to become head of finance at A catholic High School in Worcester County for a year, before becoming a financial adviser. I think it helps that the former chair of the BoT had a background in finance, and the current vice chair of the BoT, Jim Mooney, is the CEO of Baupost, a Boston-based hedge fund with over $30 billion under management.
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Post by mm67 on Nov 7, 2023 23:31:12 GMT -5
HC needs to greatly increase its endowment. I don't have a number but I honestly believe lean days are ahead. Endowment provides the cushion to support students faculty & various campus initiatives. Need a New Money Campaign (as well as a building campaign). Major donors contributing outlandish sums would spark a giving binge by the rest.
Tangential point. Outdated, unattractive Easy Street Dorms need to be replaced by more modern, attractive, more comfortable apartment style housing, Dorm style cells are no longer acceptable. Possibly, these new buildings could be in a semi-circle with a connecting plaza. The HC community can do it.
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Post by Pakachoag Phreek on Nov 8, 2023 11:31:34 GMT -5
Phreek--is there any way you could discern/estimate what management of the endowment costs us in total: salaries of managers, commissions, consulting fees, sales expenses on trades, etc? Having gone through the audited financial statement line by line, the answer is no. Between $45 and $50 million of the endowment is in funds managed by a member of the BoT.
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Post by Pakachoag Phreek on Feb 1, 2024 18:10:50 GMT -5
On a webinar today, a timeframe for doubling the value of the endowment was given. Ten years to reach $2 billion (current value $1.043 billion (if memory serves).
There was a graph charting the endowment value over the past 40 years. I tried to do a screen grab, got the screen grab, and when saving it, Zoom apparently interfered with my doing so. Hopefully, there will be a replay available.
Also a new capital campaign is coming. Seems an announcement of such later this year.
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Post by princetoncrusader on Feb 2, 2024 13:08:17 GMT -5
I also caught that portion of the webinar on an NJ Transit train heading to NYC. Yes the $1.043B value of the endowment at 6/30/23 is correct. What was most interesting to me were the slides on endowment per student and absolute endowment, and the slide with the bar charts of total return. As I recall, for the 1, 3, and 5 year periods, the endowment returns were slightly above the benchmark, although said benchmark was not defined.
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Post by newfieguy74 on Feb 2, 2024 14:23:00 GMT -5
On a webinar today, a timeframe for doubling the value of the endowment was given. Ten years to reach $2 billion (current value $1.043 billion (if memory serves). There was a graph charting the endowment value over the past 40 years. I tried to do a screen grab, got the screen grab, and when saving it, Zoom apparently interfered with my doing so. Hopefully, there will be a replay available. Also a new capital campaign is coming. Seems an announcement of such later this year. I love the ambitious goal. With the growing challenges facing higher education a strong endowment is essential.
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Post by Pakachoag Phreek on Feb 2, 2024 14:59:53 GMT -5
I am hoping HC will release a replay of the webinar. One chart showed HC compared to other LACs (who generally have much larger endowments.) IIRC, Williams' endowment pays out $80,000 per student. HC about $16,000.
Clarity about the endowment is critical if the College is abut to begin a campaign to increase substantially the endowment's value. Otherwise, it's fuzzy math and black boxes.
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Post by longsuffering on Feb 2, 2024 15:07:04 GMT -5
If HC wants to double the endowment it can double the staff hours devoted to the effort but it can't double the funds available to be coaxed into HC's coffers that aren't ending up there currently. It's very positive that the return is now beating the benchmark and our peers. My sense is HC is already doing an excellent job of harnessing funds from the logical sources.
It would be good to see a report on dollars raised per living alumnus and how we compare with peer schools. The better we are doing would seem to reduce the potential to increase the endowment by turning over more unnoticed stones and getting blood out of them.
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Post by Pakachoag Phreek on Feb 2, 2024 18:36:39 GMT -5
If HC is setting a goal of a ROI of 4 percent annually, and starting with a principal of $1,043.000,000, in ten years that annual ROI compounded would generate an endowment value of $1,544,000,000.
However, the annual ROI needs to be higher than four percent as up to five percent of the endowment's value is annually distributed for the operations of the College.
Looking at the new capital campaign, assuming a year one donation total of $100 million, and yearly donations of $36 million for years 2-7, and a annual ROI rate of four percent, at the end of year seven, the increase in endowment value would be $416 million.
At the end of ten years, the endowment value should be $2.0-$2.1 billion, with no adjustment for the annual distribution. ------------------------- If I reset the annual ROI to 6.5 percent, to cover the annual distribution of the endowment for operations, $1,043,000,000 in ten years would have generated an endowment of $1,958,000,000. After deducting an average annual distribution of nearly $50 million, the ROI contribution to the increased valuation would be about $500 million. ^^^ This is greatly smoothed and simplified, but it does give one a sense of scale. At a $2.1 billion valuation and 3300 students, the endowment value per student would be $63,600. At an annual distribution percentage of 4.8 percent of total endowment value, the annual distribution would be $101 million, or a bit more than doubling the current distribution (@ five percent, IIRC).
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xhaav
Sophomore
Posts: 27
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Post by xhaav on Feb 4, 2024 15:13:35 GMT -5
HC needs to greatly increase its endowment. I don't have a number but I honestly believe lean days are ahead. Endowment provides the cushion to support students faculty & various campus initiatives. Need a New Money Campaign (as well as a building campaign). Major donors contributing outlandish sums would spark a giving binge by the rest. Tangential point. Outdated, unattractive Easy Street Dorms need to be replaced by more modern, attractive, more comfortable apartment style housing, Dorm style cells are no longer acceptable. Possibly, these new buildings could be in a semi-circle with a connecting plaza. The HC community can do it. I could have written this post myself! Completely agree on all points. Hi all - new here. Glad to be in! Savvy and competitive stewardship of dear alma mater is a bit of an obsession for me, for whatever reason, and the endowment is on my short list of things I keep an eye on. Good to hear the $2B target, but to be honest I wonder if it’s enough. HC needs a game-changing campaign, not a keeping pace campaign. Great that $2B would support a dramatically higher endowment per student - but imagine where Williams will be in 10 years. Colby has been referenced as a good example of a school that has effectively shifted its competitive position over the past several years. Part of the reason why is a game-changing capital campaign. “Dare Northward” set a $750MM goal in 2017; that has been surpassed and the new goal is $1B. This is pure incremental revenue, never mind the incremental compounded interest. And this has been central to Colby leapfrogging ahead. PS Colby is 2/3 the size of HC. We need something on that level. Also obsessed with campus (Easy St/Hogan/Loyola) overhaul (where is the master plan???) and marketing/communications. But more about those in the right threads. How did those who viewed the recent webinar hear about it? Was it a PC event? Would love to have seen it, and those in the future.
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Post by KY Crusader 75 on Feb 4, 2024 16:15:35 GMT -5
Xhaav —welcome to the board. Please know that your contributions on any subject will be welcomed!
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