Investment Performance

Primary Investment Objective

The following chart illustrates the University’s actual performance in meeting its primary investment objective of realizing a total return exceeding the Endowment payout and inflation over a long-term horizon. On an annualized basis, the Endowment exceeded this performance objective for most periods, except 1-year.


Primary Investment Objective: Annualized Total Return ≥ Spending + Inflation

As of August 31,2015

1-Year   

3-Year   

5-Year   

10-Year 

15-Year 

Annual Total Return*

2.5%

10.1%

10.7%

8.0%

7.1%

- Spending 3.8% 3.9% 4.0% 3.9% 4.0%
- Mgmt & Admin Fee 0.7% 0.7% 0.7% 0.6% 0.6%
- Inflation 0.2% 1.1% 1.8% 2.0% 2.2%
=Above(Below) Objective     -2.2% 4.4% 4.2% 1.5% 0.3%

 *Total returns are net of fees and are calculated on annual changes in net asset value.  They may differ from payout distributions.

The management and administrative fee is set by the Northwestern Board of Trustees and used to support the University's direct and indirect costs related to gift-funded activities.

Secondary Investment Objective

The secondary investment objective is for Endowment returns to exceed the target composite benchmark. The composite benchmark’s asset class weights and benchmark components are based on the target asset allocation policy as described under the Asset Allocation tab.

This performance goal is to seek superior gains within each asset class (US Equity, Fixed Income, etc.) through the performance of outside investment managers against their respective asset class benchmark. Occasionally, investment concentrations to or away from an asset class target, or an investment theme, can also add value against this benchmark.

The Fund has surpassed the composite benchmark for all periods.

Secondary Investment Objective: Annualized Total Return ≥ Composite Benchmark

As of August 31, 2015

1-Year 3-Year 5-Year 10-Year
Northwestern University 2.5% 10.1% 10.7% 8.0%
Composite Benchmark 0.1% 8.1% 9.2% 7.0%

Tertiary Investment Objective

A third performance objective is realizing investment returns competitive with those of peer institutions. Cambridge Associates provides comparative data on returns of similar university endowments. As the chart below shows, Northwestern has performed in the top quartile of the colleges and universities surveyed over all periods.

NOTE: The previous chart compares annual returns for the year ending August 31, 2015 (Northwestern’s fiscal year end), while the following chart compares annual returns for the year ending June 30, 2015 (typical fiscal year end of other colleges and universities surveyed).

Tertiary Investment Objective: Annualized Total Return vs. Peers

As of June 30, 2015

1-Year 3-Year 5-Year 10-Year
Northwestern University 5.4% 11.6% 11.7% 8.6%
5th Percentile 6.1% 12.4% 11.5% 8.5%
25th Percentile 3.4% 10.7% 10.4% 7.2%
Median 1.6% 9.1% 9.6% 6.6%
Number of Participants 146 145 141 134
Based on Cambridge Associates' endowment survey of US colleges and universities.