The largest U.S. University endowments, including Harvard, Yale, and Stanford, are among the most successful institutional investors in the world with annualized returns of 9.9% for the ten-year period ending June 30, 2009 (the most recent fiscal year reported). Typically, the smaller the non-profit institution, the lower the investment returns on its endowment. For instance, according to the National Association of College and University Business Officers (NACUBO), university endowments with assets over $1 billion (the top 10% of endowments by size) averaged a 6.1% return while the remaining 90% of smaller endowments averaged a return 3.8% for the ten years ended 6/30/09.
We believe there are many reasons for the disparity in investment returns between smaller endowments and their multi-billion dollar peers. These reasons typically include the inability to hire dedicated investment staff; a shortage of experienced investors who have led the largest endowments; a shortage of investment staff with deep experience in alternative investment classes; a lack of established relationships with premier managers and the network to build new relationships; a lack of ability to make opportunistic investment decisions; and a lack of ability to invest in a size and manner to create effective partnerships with premier managers. By pooling the resources of many smaller endowments and sophisticated long-term investors to create a single management company, Ocean Endowment Partners provides a cost-effective way to access the premier strategies and investment talent and experience of the largest University endowments.