SMU Endowment sees largest decrease among billion cub in '16

[AfricanMustang]

Our endowment suffered the largest percentage decrease among the University endowments in the country worth more than one billion. This explains why our endowment Chief resigned....

http://www.bizjournals.com/boston/news/ ... rvard.html

[Pony^]

Our endowment suffered the largest percentage decrease among the 25 largest University endowments in the country. This explains why our endowment Chief resigned....

SMU may have had a top 25 endowment at one time; however, today it is nowhere close.

http://www.nacubo.org/Documents/Endowme ... Values.pdf

[AfricanMustang]

Our endowment suffered the largest percentage decrease among the 25 largest University endowments in the country. This explains why our endowment Chief resigned....

SMU may have had a top 25 endowment at one time; however, today it is nowhere close.

http://www.nacubo.org/Documents/Endowme ... Values.pdf

Correct. I have edited accordingly. It was the largest decrease among universities with endowments more than one billion.

[Pony^]

Our endowment suffered the largest percentage decrease among the 25 largest University endowments in the country. This explains why our endowment Chief resigned....

SMU may have had a top 25 endowment at one time; however, today it is nowhere close.

http://www.nacubo.org/Documents/Endowme ... Values.pdf

Correct. I have edited accordingly. It was the largest decrease among universities with endowments more than one billion.

25 private, nonprofit schools with some of the largest investment portfolios in the country found that all but one . . .

Therefore, public universities such as University of Texas, Texas A&M, University of Michigan, University of Virginia, etc. are not included.

Also not included are some of the private schools such as University of Chicago, University of Notre Dame, Princeton, Northwestern, etc.

[deucetz]

I bet it's due to investing heavily in oil and energy

[tristatecoog]

Does the 2016 figure include gifts as well or just investment returns on the base? Didn't the second century campaign end in 2015?

SMU has powered ahead of some stout competition like Tulane and Bowdoin among others.

[AfricanMustang]

Does the 2016 figure include gifts as well or just investment returns on the base? Didn't the second century campaign end in 2015?

SMU has powered ahead of some stout competition like Tulane and Bowdoin among others.

Yes it includes gifts if they were towards the endowment (Endowed Scholarships, Professorships), not towards buildings, etc

[smustatesman]

I guess the Cubs bet was just one year off.

[b_caesar]

SMU may have experienced the highest percentage loss, and so in that respect, yes, it's the "largest decrease," but that's only in that narrow context - what about the actual amounts? SMU's loss was $123 Million, while Harvard's loss was exactly $2 BILLION. And MIT's endowment reportedly dropped just 2%, but that amounts to nearly $400 Million. In real dollars, there are quite a few other schools on this list that had much more significant losses than SMU's over the past year, even though their "percentage" drop may not have been as large. This might have been just a clever attempt to gloss over those other, much more significant real-dollar losses...

Gotta love stats - they're spinnable in so many directions.

[tristatecoog]

b_caesar, of course you consider percentage changes, except you have to consider the fundraising haul that added to the coffers during the year. If a school is undergoing a capital campaign, it will skew results on the upside. Reasons for the downfall may be energy stock related.

[b_caesar]

b_caesar, of course you consider percentage changes, except you have to consider the fundraising haul that added to the coffers during the year. If a school is undergoing a capital campaign, it will skew results on the upside. Reasons for the downfall may be energy stock related.

What I'm saying is that percentage change like that has no meaning, and can be quite obfuscatory, too, unless you also understand and have the actual underlying hard figures to put that change into proper context. It would be helpful to know what the reasons for the actual downfall were, too. As for the capital campaign, well that's over and done with - and a report was released - I don't recall seeing any mention of how the capital campaign might have helped the endowment.

[mtrout]

How do you lose 8% in 2016 fiscal year? Are they day trading penny stocks with it?

[Pony^]

How do you lose 8% in 2016 fiscal year? Are they day trading penny stocks with it?

Obviously, this article is premature. For fiscal year 2015, the NACUBO listed 95 schools with endowments over $1 billion. Of those 95 Universities, two were in Canada; therefore, 93 U.S. universities reported endowment assets over $1 billion in 2015. The cited article focuses on the first 25 private universities to report their numbers for fiscal year 2016, but ignores the performance of approximately 68 other U.S. universities. So, other universities with endowments over $1 billion may eventually show worse results, on a percentage basis, than SMU.

The SMU endowment's fiscal year ends on May 31st, but they apparently report the balance at June 30th to the NACUBO. The Second Century Campaign ended on December 31, 2015. We don't know the dollar amount of contributions collected between July 1, 2015 and December 31, 2015. It could be that most of the endowment gifts (scholarships, chairs, professorships, programs, etc.) were funded before July 1, 2015, and the later gifts were designated for different purposes. Also, the pace of contributions could have tapered off towards the end of the campaign. Regardless, the endowment numbers reported for the period ending June, 30, 2016 only overlapped with the Second Century Campaign for six months.

SMU reported that its endowment balance grew by $81.4 million between May 2014 and May 2015, from $1.423.6 billion to 1.505 billion. During that period, gifts were contributed in the amount of $40.2 million which should remain part of the endowment. We are then told that endowment funds grew at a rate of 6.18% over the period. Of course, we don’t know the timing of the contributions or distributions. If we take the average of the beginning and ending endowment balance we get $1.464.3 billion. If we then apply the 6.18% rate of return to the average balance ($1.464.3 x 6.18%) we get $90.49 million in estimated earnings. The endowment, however, made distributions to the University of $60.2 million, or approximately 66% of estimated earnings. The $60.2 million distribution accounted for 16% of the University’s revenue sources for the year.

Therefore, the increase/decrease in the endowment is a combination of earnings, gifts to the endowment and distributions to the university. Earnings could have been positive, but distributions to the University could have exceeded gifts and earnings. We won’t know exactly what happened until SMU issues its next report.

https://issuu.com/smudallas/docs/smu_annualreport_2015/41

[Pony^]

My guess is that gifts were down for the period. Earnings were less than the previous year, but not negative; however, the University did not cut back on distributions to the university as they were needed for operations.

[rodrod5]

the 2016 NACUBO numbers are out

http://www.nacubo.org/Documents/Endowme ... Values.pdf

Smith College saves the day for those that have a concern with being the largest % loser of the top private schools

and as for the argument about total dollar loss Vs % loss

well of course when you have 20X the endowment you are going to take a larger dollar loss even if you have a smaller % loss

but at the same time since these endowments pay out generally a rolling 5 year average of the corpus of the endowment at about 4.5% to 5% rate those universities with the larger total dollar loss are still generally OK because that only equates to a much smaller annual lower payout

and then there is the factor that when their endowment goes back up with the general markets they will of course have a much larger total dollar gain even if their % gain is the same or slightly smaller

so really the meaningful comparison is % gain and loss