The top university endowments have been announcing their annual investment returns over the past week.
Harvard University announced its endowment rose 15.4% in the fiscal year ending June 30th. That return trailed Yale University’s 20.2% and Stanford University’s 17% for the same period.
These are solid returns. But each endowment trailed the S&P 500’s return of 24.6% over the same period by a substantial margin.
Once again, look for the “smartest guys in the room” to catch a lot of flack for being unable to match, let alone beat, a simple S&P 500 Index fund.
That said, it’s not like Harvard hasn’t been making money. In fact, the Harvard endowment generated an average of 11.4% over the past five years. Notwithstanding the challenges of the financial crisis, that’s not far off its long-term track record of 12.3%.
The real issue is that Harvard and its academic rivals have not only trailed the S&P 500 over the past five years, but also have even struggled to match a conventional 60/40 mix of U.S. stocks and bonds.
Read more about how you can follow Harvard’s investment strategy at Eagle Daily Investor.