(Bloomberg) — Last year marked a dramatic turn for US college endowments as hundreds of universities reported steep losses, reflecting the tumult in global markets.
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Endowments took an 8% average loss for the year ending June 30, according to a study released Friday by the National Association of College & University Business Officers and TIAA. That’s down from an average gain of 30.6% a year earlier.
The latter half of fiscal 2022 took a toll on stocks and bonds, as inflation surged and the Federal Reserve responded with aggressive interest rate hikes. The S&P 500 fell 12% for the fiscal year.
“The 2022 fiscal year was truly a tale of two markets, with positive economic tailwinds driving equities higher through December 2021, followed by a crushing combination of inflationary pressures,” Jill Popovich, senior managing director and regional general manager at TIAA, said in a statement.
Endowments still boosted overall spending, according to the study, which includes responses from 678 institutions. Respondents reported spending a total of $25.85 billion, up from $23.89 billion last year.
Financial aid accounted for most of the spending at 46%, followed by 15.6% for academic programs and research.
Universities with larger endowments fared better because of their investments in private markets. Portfolio allocations to private equity and venture capital accounted for 30%, with public equities comprising 28%.
While the study didn’t include results by university, many top endowments reported returns on their own late last year. Harvard University’s lost 1.8% and Stanford University dropped 4.2%, while Yale University eked out a gain of 0.8%.
Read More: Stanford Endowment Falls by $1.5 Billion Amid Equity Reversal
Fueled by rising oil and natural gas prices and increasing demand for commodities, private energy and infrastructure were the top-performing assets, according to the study.
Private equity and venture capital also posted strong returns, possibly indicating private managers had not yet marked down their books to reflect decreased valuations.
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