Duke posts 13.5 percent gain on endowment

The University reported a 13.5 percent increase on its endowment investments for fiscal year 2013, raising the endowment's value to $6 billion from $5.6 billion.

The return was significantly higher than fiscal year 2012, when investments only returned 1 percent and the value actually declined due to withdrawals for the operating budget. For fiscal year 2013, endowment gains funded approximately 16 percent of the University's $2.2 billion in operating revenues, according to draft statements provided by administrators.

Duke's endowment slightly outperformed several other peer universities, with Harvard University and Dartmouth College registering an 11.3 percent and 12.1 percent return, respectively. Endowments and foundations posted a median 11.28 percent return on investments for fiscal year 2013, according to Wilshire Associates.

Major market indices generally yielded a higher return in the most recent fiscal year.
The S&P 500, which tracks U.S. equities, saw an 18.5 percent gain for the period ending June 30. The MSCI All Country World Index, a global equity measure, rose 16.6 percent.

On an longer-range annualized basis, Duke's endowment has beaten a traditional 70 percent stock/30 percent bond portfolio, generating a 10.6 percent return on a 10-year annualized basis for fiscal year 2013.

Universities, under the "endowment model," have become known for investing more heavily in alternative, more illiquid assets, including private equity, real estate and hedge funds, to generate above-market returns. The value of Duke's investments in alternatives represented nearly half the value of its total investments in 2013.