US endowments in five charts

Harvard Management Company and University of Virginia have both admitted to being disappointed with their endowment returns following a challenging period for such investors.

US endowments have faced various challenges over the past two years.

Harvard Management Company said in September it was disappointed by annual returns of 8.1 percent for the fiscal year ended 30 June. A marked improvement from its 2 percent loss the preceding year, the returns were not at the level HMC had aimed for with the implementation of an “aggressive” restructuring plan in December.

University of Virginia also reported an underwhelming 5.6 percent return for private equity over the same period, significantly higher than the 3.9 percent loss Virginia reported last year. Its 13 percent return across total equities fell short of its 19.4 percent benchmark.

Research published in January found US endowments recorded a 1.9 percent loss for the fiscal year ended 30 June 2016, down from 2.4 percent the previous year. The poor results were compounded by the worst year for private equity among North American schools and colleges since the financial crisis.

With a 53 percent allocation to alternatives across 805 endowments, private equity is likely to play a key role in the future performance of endowments. Here are five charts highlighting their appetite for alternative assets and private equity as of 30 June 2016.