UNC, Duke Endowments Take A Financial Hit

Oct 3, 2016

Endowments for UNC-Chapel Hill, Duke University and others saw investment losses last year
Credit Tim Schleicher / flickr, Creative Commons

After years of rapid growth, endowments for both Duke University and UNC-Chapel Hill took a hit last year.

DUMAC, which manages Duke University's endowment and other investment assets, reported a negative return of 2.6 percent on the university's investments and UNC Management Company, which manages investments for UNC-Chapel Hill, North Carolina State University and other UNC System universities and entities, reported a negative return of 2 percent.

The losses, coupled with distributions from the respective funds to cover scholarships and other costs, brought the Duke endowment to $6.8 billion and the UNC endowment to $4.5 billion. Of the UNC investments, the UNC-Chapel Hill endowment accounts for about $2.8 billion, or slightly less than two-thirds of the overall fund.

These endowments are important to both students and professors as funds from the endowments cover scholarships, professorships, research and more. Duke, for example, designates 22 percent of endowed funds to financial aid and another 19 percent to professorships. Gifts to university endowments are invested in various asset classes to gain value.

Total endowment size through the years. The UNC investments include endowments of UNC-Chapel Hill, N.C. State University and other UNC System universities
Credit DUMAC, UNC Management Company / Duke University, UNC System

The poor returns reported for the most recent fiscal year, which measured the performance from July 1, 2015, through June 30, 2016, came at a time in which Wall Street in general felt the effects of a bear market. Still, both investment groups performed more poorly on the year than some of their self-identified benchmarks.

Year-to-year returns can fluctuate widely for any investment group, and taking a longer look shows a better picture for both Duke and UNC. Both investment groups reported five-year annualized returns of about 7 percent.