Wesleyan Endowment + 53% ! in 2021

Like many of its peers Wesleyan had a very strong fiscal 2021. The endowment is now over $1.67Bn. Which of course means more resources and hopefully a return to full need-blind for the 2023 admission cycle!

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I foresee one more capital campaign to really nail down need-blind. But, who knows? One more year like this one would practically equal a capital campaign. Incidentally, the idea that Wesleyan can just invest its way to fiscal stability is the last thing the administration wants to see gain ground.

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Where did you find this information?

It’s buried, but there is an article in the Ct. Mirror (or whatever it’s called) that references it and links to a WSA committee report. Wesleyan’s annual letter is noticeably late this year.

I assume the news to be credible though. Anne Martin and her team saw 8.8% returns last year, which was well above how many endowments performed in 2020 (Williams saw a 3.3% return in 2020). Bowdoin hit 54% for 2021, which I think tops NESCAC reporting. Tufts was somewhere in the 37% range, Williams around 49% and Middlebury around 37%. I don’t see where Amherst or several other NESCACs have reported.

Duke hit 56% and Washington University saw a whopping 65% return. Brown hit 51.5%. The most common returns see across all schools is somewhere in the mid-to-high 30% range.

A banner year to be sure. Now the trick is how to keep at least some of it before the worm turns, as it surely will.

Wes also raised almost $77 million in 2020, which is outrageously successful for an annual fund raise. I think the next big campaign is around the corner too.

I think Roth has done well by Wesleyan on the financial security front. Hiring Martin to replace that Dartmouth-educated scoundrel Thomas Kannam, who should be in jail for his malfeasance, was one of the best moves they’ve made. She’s a super star and yet another brilliant Swenson disciple. She’s also a Wesleyan fan with deep family roots at the school (though she herself is a Smithie with a Stanford MBA). She’s a brilliant manager.

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Ok, the annual letter is finally out and confirms the rumors. Wesleyan wound up fiscal year 2021 with a 54.2% return on investment and an ending balance of $1.65 billion. It’s likely higher than that now given the June 30 fiscal year end for school endowments. This probably takes Wes back to 100% need-blind admissions.

Anne Martin makes an interesting comment that these outsized returns likely include forward returns from coming investment cycles and that she expects tougher slogging ahead. One thing is for sure, if your endowment manager didn’t clear at least 20% returns on invested assets, it’s probably time for a 360.

Here is a link and a snippet for those who are interested:

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I don’t think I’ve ever read a year end letter quite like it. It was worth the wait.

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So, would it not be accurate to assume Wesleyan’s endowment is in the vicinity of $2 billion? The equity portion has almost certainly grown since mid-summer; I can’t imagine that has been baked into the $1.65 billion figure.

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Equities ended the year with a little slide, but I don’t have data on the second half of 2021 equities marked from June 30th. Plus, the annual letter only gives the reader a categorical peak into how the endowment is invested. They have a decent amount invested in alternatives, and those are hard to know about without knowing their portfolio specifically. There could have been PE payouts and wind-ups, etc., or not. That said, they are equity heavy and the broader market index (just dropping $1 in the 500) returned something like 27+%. So, yeah, I’m guessing they inched closer to $2b, but am only guessing.

I’m happy for the school that it has found such an ace manager who also has skin in the game as a person with ties to Wesleyan. They are in good hands after years and years of neglect of that aspect of running the institution.

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*peek. Sorry, I hate lingering misspellings in my posts.

Wesleyan’s endowment surge has now taken its Endowment per student to over $500k this means it will now have to pay the 1.4% net returns surtax, which it had previously avoided. Joining Wesleyan in this somewhat inglorious group this year is Brown, Colby and Vassar. Of course Amherst and Williams and the other major Ivies and Stanford and MIT were already in this group before.

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Good problem to have I guess.

I tried to quickly look up to understand how the tax is applied, and it seems there is some ambiguity and a few schools have been reluctant to answer questions about how they apply it.

Just my opinion, but as long as the church doesn’t have to pay tax, schools shouldn’t either.

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I have it on good authority that they came close in Dec’ 21. Lost a bit in 1Q22, finished ~$1.8B by end of FY22.

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If that is true and they finished around $1.8Bn for June of 2022, that would imply something like a 7% rate of return… given that the S&P was down about 10.5% over that time frame and that many private deals similarly should have been marked lower, then either they had some outstanding outperformance (hedge funds?) or else the total number benefited from some large donations which buffered the investment drawdowns… guess we will have to wait for the final numbers, but so far all I have seen is a single story saying that “US College endowments lost 10.2% over FY22” I am assuming they are quoting some NACUBO report.

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Any word on the next capital campaign?

I haven’t gone and looked, but for endowments the fiscal year ends 6/30. I didn’t realize the S&P lost ground in the second quarter. I thought that was more late 3rd and 4th quarter.

Of course, the other thing that makes this hard to track with the broader market are all the alternatives that endowments like Wesleyan invest in. The story of those investments is often specific to the investment. OTOH, if they are appropriately marking those investments to market for the financial snapshot, in theory there shouldn’t be a big gap. I guess we’ll see. I would think that the return numbers would not include gifts, though the always report an ending balance value for all of the funds in the endowment, which would include new money. Wesleyan had an exceptionally successful 2020 fundraising year. I don’t recall what it was in 2021, but they certainly don’t seem to ever have a problem raising funds.

I think that’s exactly right. The bottom-line endowment figure should not be conflated with the rate of return. My source was quoting from memory and is by no means an accountant. They also said Wes had a record breaking fund raising year. So, yes. The possibilities are endless until we actually get our hands on the Annual Report.

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my return figure for the S&P was for the college fiscal year, June 2021 - June 2022. As I said, to be able to have an ending endowment in excess of June 2021 - 7% increase over the reported 2021 figure that implies that either Wesleyan’s investment performance was vastly superior to the market averages and peer group or instead that they were very successful in fund raising. Most likely the latter. In any case, maintaining an endowment close to $2Bn is a good thing for the future well being of the school and we should be pleased with both the investment office and likely the fund raising department too!

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I was talking about @circuitrider ’s point that there was an unofficial snapping of the chalk line in December of about $2 billion and subsequent hit in early 2022 with everyone else.

In any event, yes, getting near $2 billion is a great achievement however they get there.

FWIW, they did outperform several endowments in 2020 and Martin comes from a place (Yale) that often well out-performed other endowments. But agree, a net positive gain this year in light of market conditions would be surprising absent gifts.