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Brown University lags behind academic peers in its investment return

December 17, 2012

Brown University might be perhaps the hippest destination in the Ivy League, but it’s a investment laggard compared with the nation’s other top universities.  

Brown earned just 1 percent on its portfolio in fiscal 2012, placing it 10th in this analysis by the Skorina Letter, a financial newsletter:

FY12 Rtn Rank AUM $ Bil Endowment FY12 Rtn % vs. 60/40 vs. NACUBO
1 9.7 M.I.T. 8.00 1.76 6.80
2 6.6 Chicago 6.80 0.56 5.60
3 3.4 Dartmouth 5.80 -0.44 4.60
4 19.4 Yale 4.70 -1.54 3.50
5 17.1 Princeton 3.10 -3.14 1.90
6 7.8 Columbia 2.30 -3.94 1.10
7 6.6 Penn 1.60 -4.64 0.40
8 5.7 Duke 1.00 -5.24 -0.20
9 16.5 Stanford 1.00 -5.24 -0.20
10 2.5 Brown 1.00 -5.24 -0.20
11 5.1 Cornell 0.14 -6.10 -1.06
12 31.7 Harvard -0.05 -6.29 -1.25
NA NA NACUBO >$1 Bil 1.20 -5.04 0.00
NA NA S&P 500 5.40 -0.84 4.20
NA NA Barclay’s Agg Bnd 7.50 1.26 6.30
NA NA 60/40 6.24 0.00 5.04

The university’s chief investment officer, Cynthia Frost, framed Brown’s performance this way:

“Brown earned a modest return in a challenging market,” Frost said. “Our portfolio is well positioned to support the University’s long-term goals.”

The BDH called Frost the university’s highest-paid employee in 2011, noting how her $1 million-plus compensation marked a 13 percent increase from 2008. Plans now call for her to leave Brown at the end of the year, with personal reasons being cited as the explanation.

FWIW, Brown’s performance compared to its peer over the last 5 years isn’t much better than it was in 2012, according to Skorina:

5-yr Rtn Rank Endowment 5-yr Rtn % vs. 60/40 vs. NACUBO
1 Columbia 4.86 3.67 3.11
2 Chicago 4.17 2.98 2.42
3 M.I.T. 3.72 2.53 1.97
4 Princeton 3.04 1.85 1.29
5 Duke 2.19 1.00 0.44
6 Dartmouth 2.19 1.00 0.44
7 Stanford 2.16 0.97 0.41
8 Penn 1.84 0.65 0.09
9 Yale 1.83 0.64 0.08
10 Brown 1.45 0.26 -0.30
11 Harvard 1.24 0.05 -0.51
12 Cornell 0.54 -0.65 -1.21
NA NACUBO >$1 Bil 1.75 0.56 0.00
NA S&P 500 -2.54 -3.73 -4.29
NA Barclay’s Agg Bnd 6.78 5.59 5.03
NA 60/40 1.19 0.00 -0.56

As Skorina notes, Brown did outperform S+P, which lost 2.5 percent over the five-year period. Yet Brown’s fiscal 2012 performance was worse than the 1.4 percent return earned by the State of Rhode Island’s pension fund.

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