Stanford investments up 8.4%

Strong market performance by Stanford’s investments helped buoy the value of its endowment to a hefty $37.6 billion over the past year, the university has announced. That’s up from $9.9 billion two decades ago.

The value of Stanford’s endowment, which this year bankrolled much of the university’s day-to-day operations through a $1.8 billion “payout,” represents not only investment gains, but also gifts and the sum of its annual distribution to the campus operating budget.

The school’s overall investments — called the “merged pool,” the principal investment vehicle for the endowment and also money set aside for future hospital projects — now surpass $42.8 billion.  The endowment represents just part of the total “merged pool” portfolio.

Stanford’s investment portfolio grew 8.4% for the fiscal year ending June 30. This performance trailed the 10.1% median return for U.S. college and university endowments for the year, as preliminarily reported by Cambridge Associates.

But Stanford’s five- and 10-year net annualized investment performance of 9.9% and 8.6%, respectively, exceeded the median university endowment return of 9.0% and 7.0% over the same time periods.

This year’s performance was slightly impaired by investment non-marketable asset classes, including private equity, which are difficult to buy or sell, said Robert Wallace, chief executive officer of Stanford Management Company, in a statement.

“Strong results in publicly traded securities were diluted by weaker performance in non-marketable asset classes, including private equity,” he said.

Investment in private equity provides crucial diversification from broader stock and bond market trends. Such “alternative” investments, however, can be less predictable than more conservative choices.

But that strategy will boost results over the long term, Wallace predicted.

Stanford’s fast-growing endowment, created with a founding grant by Leland and Jane Stanford, ranks third in the national ranking of private campuses. It was valued at $36.5 billion in 2023.

In recent years, it has faced pressure from protestors to divest from Israel and oil companies. The extent of its investment in these areas is unknown because details of the endowment’s portfolio are private. So far Stanford has rebuffed student exhortations to sell these holdings. Last summer, the university announced that it would maintain its controversial ties to the fossil fuel industry, citing academic freedom and the need for practical knowledge in the search for climate-crisis solutions.

Its endowment is dwarfed by Harvard’s, which started fundraising more than 350 years ago. Harvard’s endowment surged to $50.7 billion during the last fiscal year, larger than the economies of 120 countries. Yale University’s endowment, valued at $40.7 billion, ranks second. Most universities have yet to release updated endowment figures.

Next year, Stanford’s endowment is expected to disburse $1.9 billion to support academic programs and financial aid.

Families of undergraduates with annual incomes below $100,000 do not have to pay tuition, room or board at Stanford. The university also requires no parental contribution toward tuition from families with annual incomes below $150,000 and typical assets. Families with higher incomes may receive aid based on their financial circumstances.