MIT announced last week that the size of its endowment fell by roughly 21 percent this past fiscal year—substantially better than the 30 percent declines reported by Harvard and Yale only a few days earlier.
In the year ending June 30, the MIT endowment generated an investment loss of 17.1 percent. When combined with the $518 million paid out for operations and the $143 million received in gifts and transfers, the endowment’s total value fell from $10.1 billion to $8 billion.
MIT’s endowment outperformed its peers this past year. According to investment consulting firm Wilshire Associates the median large endowment this past year generated an investment loss of roughly 18 percent. “Investments in the fixed income, marketable alternative, real asset, and real estate arenas helped offset significant declines in public and private equity portfolios,” the MIT press release stated.
According to its Web site, MIT has laid off 105 employees since January and has left 90 other open job positions unfilled to meet budget reductions.
The diversified, aggressive investment strategies of schools such as Harvard and Yale typically bring greater returns, but those strategies were less fruitful this year. While the University of Pennsylvania invested heavily in government bonds and achieved investment losses of only roughly 16 percent, Harvard, with its large investments in hedge funds and private equity, reported a 27.3 percent loss.
With gifts and payout, that loss translated to an $11 billion decrease in Harvard’s endowment—an amount greater than the total value of any other school’s endowment except Yale, Princeton, and Stanford. The value of Harvard’s endowment now stands at $26 billion, roughly the same level it was at in 2005.
MIT’s statement also noted that its endowment has generated an annualized return of 9.3 percent over the past 10 years—slightly better than Harvard’s 10-year annualized return of 8.9 percent.
—Staff writer Peter F. Zhu can be reached at email@example.com.