Key Takeaways
- • Yale's endowment rose $11.1 billion in fiscal year 2021 to a record $42.3 billion, up from $31.2 billion in fiscal 2020, according to the Yale Daily News.
- • The gain represents the third-highest rate of return since 1970 and the highest return rate in two decades, in line with record returns at peers including Harvard, Dartmouth, and MIT.
- • Endowment spending funds approximately 35 percent of Yale's $4.3 billion operating budget.
- • Venture capital comprised 22.6 percent of the endowment, roughly 14.9 percentage points above the average university, with the 2020 venture portfolio returning 21.3 percent.
- • Yale is directing new spending toward a $250 million School of Public Health, 45 STEM faculty positions, and a $52 million increase in its voluntary contribution to New Haven.
Summary
Yale's endowment grew by $11.1 billion in the 2021 fiscal year, reaching a record $42.3 billion from $31.2 billion a year earlier, according to the Yale Daily News. The University described the gain as the third-highest rate of return since 1970. Peer institutions, including Harvard, Dartmouth, and the Massachusetts Institute of Technology, also reported record-breaking returns. Spending from the endowment contributes about 35 percent of Yale's $4.3 billion operating budget.
Yale Chief Investment Officer Matt Mendelsohn described the year as extraordinary in a press release, while cautioning that the University measures success over longer periods by its ability to provide stable and growing support to the institution. The endowment is spread across asset classes including absolute return, public equities, and venture capital. Venture capital accounted for 22.6 percent of the endowment, about 14.9 percentage points above the average university allocation. Danny Otto, associate director of the Yale Investment Office, told the News that the portfolio's growth reflects both strong performance and increased new investment. The 2020 venture portfolio returned 21.3 percent. The article notes that roughly 75 percent of venture-backed companies fail to return capital to investors.
The gains have enabled new spending commitments. Yale is eliminating the student income contribution, establishing a School of Public Health supported by $250 million in endowment funds, and increasing its voluntary contribution to the City of New Haven by $52 million. The University also plans 45 new STEM faculty positions, redesigned buildings on Hillhouse Avenue, and a new School of Engineering and Applied Sciences led by its own dean as a distinct budgetary unit. A new master's degree in Personalized Medicine & Applied Engineering will launch this summer. President Peter Salovey said the endowment is growing as endowments should, and that the operating budget is in good shape.
The University continues to face pressures. COVID-19 has depressed revenue from in-person events and athletics. Political developments have also affected the portfolio. As of late 2021, Yale held $362 million in Vanguard's emerging market ETF, of which about $10.5 million, or 2.9 percent, was Russian exposure; that exposure was eliminated after sanctions removed Russian stocks from the index. Separately, the Advisory Committee on Investor Responsibility began reviewing whether certain Chinese companies should be ineligible for investment over human rights concerns, following calls from community members and human rights lawyer Rayhan Asat, a former Yale World Fellow.
Yale Chief Investment Officer Matt Mendelsohn described the year as extraordinary in a press release, while cautioning that the University measures success over longer periods by its ability to provide stable and growing support to the institution. The endowment is spread across asset classes including absolute return, public equities, and venture capital. Venture capital accounted for 22.6 percent of the endowment, about 14.9 percentage points above the average university allocation. Danny Otto, associate director of the Yale Investment Office, told the News that the portfolio's growth reflects both strong performance and increased new investment. The 2020 venture portfolio returned 21.3 percent. The article notes that roughly 75 percent of venture-backed companies fail to return capital to investors.
The gains have enabled new spending commitments. Yale is eliminating the student income contribution, establishing a School of Public Health supported by $250 million in endowment funds, and increasing its voluntary contribution to the City of New Haven by $52 million. The University also plans 45 new STEM faculty positions, redesigned buildings on Hillhouse Avenue, and a new School of Engineering and Applied Sciences led by its own dean as a distinct budgetary unit. A new master's degree in Personalized Medicine & Applied Engineering will launch this summer. President Peter Salovey said the endowment is growing as endowments should, and that the operating budget is in good shape.
The University continues to face pressures. COVID-19 has depressed revenue from in-person events and athletics. Political developments have also affected the portfolio. As of late 2021, Yale held $362 million in Vanguard's emerging market ETF, of which about $10.5 million, or 2.9 percent, was Russian exposure; that exposure was eliminated after sanctions removed Russian stocks from the index. Separately, the Advisory Committee on Investor Responsibility began reviewing whether certain Chinese companies should be ineligible for investment over human rights concerns, following calls from community members and human rights lawyer Rayhan Asat, a former Yale World Fellow.
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