Investment Review from the
Chief Investment Officer

At the end of fiscal year 2019, the market value of the Notre Dame Endowment Pool grew to $13.78 billion from $13.11 billion at the end of the prior fiscal year. The investment return for the year was 7.2 percent net of investment management fees.

Both public and private markets were generally favorable for the year, although investors experienced pronounced ups and downs and a number of areas of uncertainty. In domestic public markets, similar to past cycles a small number of the largest companies in the US had an outsized positive impact on the returns of some benchmarks. While overseas markets lagged the US, we remain positive about the prospects ahead and the current reasonable valuations in these markets.

During the year, positive contributors to the Endowment Pool return included venture capital, growth equity and buyout funds, US large cap growth stocks, US investment-grade fixed income, and a basket of real estate investment trusts. More challenging exposures for the year included US small cap and value-oriented equities and emerging markets.

Endowment Pool Market Value

As of June 30

Endowment Pool Market Value Chart - 1999 through 2019, Value rising from just above 2 billion to just below 14 billion

As an endowment intended to fund the University’s mission in perpetuity, long-term returns are especially important, as are strategies to dampen volatility in order to maintain spending and plan prudent budgets over the course of many years. Indeed, a long-term investment horizon, the stability of our team and philosophy, a strong institutional brand and good governance are significant advantages for our investment program at Notre Dame. The strong investment performance of the Endowment Pool for the fiscal year and over longer-term periods is shown in the chart below compared to benchmarks.

Endowment Pool Investment Performance

(Annualized returns net of fees)
Periods ended June 30, 2019

Endowment pool investment performance Chart - comparing 1, 5, 10, and 20 year returns

Notre Dame Endowment Pool returns are net of (reduced by) investment managers’ fees. The Strategic Policy Portfolio is Notre Dame’s internal benchmark consisting of indices representative of the target investment portfolio. The Trust Universe Comparison Service (TUCS) Large Fund Median is a compilation of returns of endowment, pension and foundation investors greater than $1 billion and thus provides a basis for comparison to the performance of large institutional investors generally. The 60/40 mix is an index blend of stocks/bonds as represented by the MSCI All Country World Investable Index and the Barclays Capital U.S. Aggregate Bond Index and thus is a measure of performance compared to a more traditional or retail portfolio.

The investment portfolio remains anchored by equities in both the public and private markets, with all areas highly diversified. More cyclical assets in the multi-strategy portfolio provide exposure to a variety of other strategies and risk-reducing approaches with return streams less correlated to the equity markets.

Endowment Pool Asset Allocation

As of June 30, 2019

Endowment pool asset allocation chart - with percentage breakdowns for public equity, private equity, and multi strategy assets

Financial aid for Notre Dame students remains the largest area of spending from the Endowment, with all areas of campus life benefiting. Endowment spending overall during the fiscal year equated to 27 percent of the University’s expenditures. Spending amounted to $426 million, up 8.4 percent from $393 million the prior year. Growth in annual spending over the last 20 years is shown in the accompanying chart. Annual spending in fiscal 2019 was six times the amount of spending 20 years ago.

Endowment Spending History

Fiscal year ended June 30

Endowment spending history chart - 1999 through 2019, Value rising from more than 60 million to more than 400 million

We all know there are many special things happening at Notre Dame every day, made possible by the generosity of our many loyal alumni and friends. A sound investment program and prudent spending practices ensure this generosity will continue to provide the resources necessary for the University to thrive.

Endowment Spending Purposes

Year ended June 30, 2019

Endowment spending purpose chart - pie chart with spending percentages

Scott C. Malpass
Vice President and Chief Investment Officer