The largest U.S. university endowments, including Yale, Princeton, and Stanford, are among the most successful institutional investors in the world. Typically, the smaller the non-profit institution, the lower the investment returns on its endowment. For instance, for the period ending June 30, 2022 (the most recent fiscal year reported), college and university endowments over $1 Billion had a median annualized return of 8.7% for the prior ten years and 9.3% for the prior five years. This compares with median annualized returns for endowments under $100 Million of 6.9% for the prior ten years and 5.7% for the prior five years, according to the National Association of College and University Business Officers (NACUBO).
We believe there are many reasons for the disparity in investment returns between smaller investors 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.