With 12.4% return, Brown endowment grows to record $4.2 billion

The endowment’s strong performance was broad-based across the portfolio and bolstered by protecting capital during stock market declines.

PROVIDENCE, R.I. [Brown University] — With its investment portfolio benefitting from a strong performance distributed across asset classes, Brown University’s endowment significantly outperformed its benchmarks with a 12.4% return during Fiscal Year 2019.

At the close of the fiscal year on June 30, 2019, the endowment’s value stood at $4.2 billion, an all-time high.

The University’s 12.4% return surpassed both the preliminary return of its benchmark portfolio (5.8%) and Cambridge Associates’ preliminary mean and median returns for colleges and universities (5% and 4.9%, respectively). Over the last decade, the endowment has produced $2.9 billion in investment gains and provided $1.6 billion to support Brown’s educational mission.

Jane Dietze, the University’s vice president and chief investment officer, said the investment returns reflect the strong partnerships Brown has forged with its investment managers and cited the portfolio’s emphasis on downside risk management, which proved to be valuable in a volatile year for U.S. stock markets. The outperformance against the S&P 500 index occurred primarily when the market was declining last fall, she said. 

Dietze noted that the endowment portfolio is not constructed to optimize the investment performance over a single year, but rather that the Brown Investment Office invests in a flexible, balanced portfolio that prioritizes risk-adjusted returns and uses a long-term investment horizon. Annualized returns for Brown’s endowment for three, five, 10 and 20 years are 13%, 8.5%, 10% and 8.6%, respectively.

The endowment provided $165 million to Brown’s operating budget during FY 19, a contribution that represents approximately $16,000 per student and 14 percent of the University’s total operating budget. Endowment funds support a wide variety of strategic priorities at Brown, including financial aid, professorships, academic programs, teaching and research.

“From providing scholarships to undergraduates to funding high-impact research by world-class faculty and graduate students, contributions from the endowment are vital in advancing Brown’s strategic priorities,” said Barbara Chernow, executive vice president for finance and administration. “While we are pleased to have achieved a successful return for Fiscal Year 2019, even more important is our continued focus on the endowment’s long-term mission of sustaining the Brown experience for generations of students to come.”

Chernow called the endowment a foundational financial resource for the University, which is committed to ensuring that no student who aspires to attend Brown will encounter cost as a barrier. The endowment continues to fund a significant portion of the University’s financial aid budget each year, enabling Brown to meet the full demonstrated financial need of all undergraduate students. For the incoming Class of 2023, 43 percent of students received need-based aid with an average financial aid package of $51,532.