FY17 was an eventful year in the capital markets, with market performance and consumer sentiment being impacted by a presidential election that buoyed the market on prospects of tax reform, deregulation and improved trade economics. At the same time, strong gains in the equity markets were not dampened by international events (North Korea, Brexit, etc.) or news from Washington, D.C.
Within this environment, on June 30, 2017, the consolidated value of endowments held by all of the various entities supporting William & Mary and its programs totaled almost $899 million, including $24.6 million in revocable endowments held by third parties. This resulted in a year-over-year increase of $71 million, or 8.6%, over FY16. The FY17 value is net of fees, new gifts, investment return and spending withdrawals, and reflects a rebound in endowment value that began in FY10 and continued through FY17.
At this point, approximately 81 percent of the endowment consists of securities and fund types that can be managed through constructed portfolios of various asset classes. The remaining 19 percent of the endowment consists of physical real estate, direct investments and types of external trusts where W&M is a named irrevocable beneficiary. Seventy-two percent of the endowment is actively managed through the William & Mary Investment Trust (WAMIT).
As noted above, growth in FY17 reflects investment returns net of fees, new gifts and receivables, market changes in externally managed accounts, change in property holdings and spending withdrawals. The Board of Visitors’ endowment recognized a 13 percent one-year investment return as of June 30, 2017, with WAMIT recognizing a 12.1 percent return. Together, these remain the largest of the investment portfolios and both remain highly diversified across asset classes.
WAMIT was created in 2004 as a means by which all of the university’s affiliated foundations that raise money for endowment could invest under the same investment platform and get the same performance achieved through active management of a highly diversified portfolio. The goal of WAMIT is to maximize long-term real return consistent with appropriate risk tolerances and the recognized need to preserve intergenerational equity.
WAMIT is now showing positive annualized performance against its benchmark over one-, three-, five- and ten-year periods. This consistent performance is critical to the long-term growth of endowments supporting the university, its schools and departments.
Looking back, endowment growth over President Reveley’s tenure to date has been significant. On June 30, 2008, preceding the “Great Recession,” the consolidated endowment totaled $580 million; nine years later on June 30, 2017, it totaled $898.7 — an increase of almost 55 percent. The $318.7 million increase over this period was attributable to approximately $208.8 million in new gifts added to the endowment, approximately $19.4 million in distributed income reinvested as quasi-endowment and approximately $90.5 million as net appreciation (investment gains less authorized spending withdrawals).