The University announced a 4.2% investment loss in Merged Pool returns on Oct. 18. The Merged Pool includes almost all of Stanford’s endowment as well as hospital funds and non-endowment funds. This year’s returns are the lowest since 2009 and the first negative net loss since the 2016 fiscal year.
Though the University’s Merged Pool outperformed the median return of other higher education institutions in the country, the returns marked a sharp drop from the 40.1% return on investment in the last fiscal year, which ended in June 2021.
A typical index-based portfolio of stocks and bonds lost 14.6% for the 2022 fiscal year, according to Stanford News.
The negative return is not expected to have “any impact on financial aid, salaries, or department/school budgets,” wrote University spokesperson Luisa Rapport in a statement to The Daily.
The endowment was valued at $36.3 billion on Aug. 31, according to the announcement. The endowment consists of about 75% of the Merged Pool and other assets. The Merged Pool was valued at $40.1 billion on June 30.
The endowment is managed by the Stanford Management Company (SMC), along with the University’s other financial assets. The endowment includes more than 7,700 funds established by philanthropic donors over the years, according to the SMC.
In the 2022 fiscal year, the endowment disbursed $1.5 billion, which funded 21% of the University’s operating expenses, including financial aid, student services, faculty salaries, research, libraries and athletics. For the 2023 fiscal year, $1.75 billion will be dispersed to various university departments and facilities, according to Stanford News.
The release said Stanford’s endowment returns surpassed the 6.3% loss seen across U.S. colleges and universities. Compared to peer institutions, Stanford’s endowment return is close to the median.
According to the announcement, the 5- and 10-year annualized net investment returns are 10.9% and 10.2% respectively, compared to national medians of 8.4% and 8.1%. These metrics represent average growth over the respective periods of time.
Rapport wrote that the endowment’s future is unclear: “It is impossible to accurately predict future year’s investment results, but it is prudent to expect the financial market environment to continue to be challenging,” Rapport wrote.