Investment Performance
Primary Investment Objective
The following chart illustrates the University’s actual performance meeting its primary investment objective of realizing a total return exceeding the endowment payout and inflation over a long-term horizon. The University’s investments historically have grown at a rate exceeding this objective. For the three-year period ending June 30, 2022, the portfolio generated a 12 percent annualized return net of all internal and external fees and costs, exceeding inflation and University spending by 2.4 percent per year for the period.
Primary Investment Objective:
Annualized Total Return ≥ Spending + Inflation
As of June 30, 2022
| 3-Year | 5-Year | 10-Year | 20-Year | |
|---|---|---|---|---|
| Annual Total Return* as of June 30, 2022 | 12.0% | 10.3% | 9.5% | 9.1% |
| - Spending** as of August 31, 2022 | 4.7% | 5.0% | 4.9% | 4.8% |
| - Inflation as of August 31, 2022 | 4.9% | 3.8% | 2.5% | 2.5% |
| =Above(Below) Objective | 2.4% | 1.5% | 2.1% | 1.8% |
*Total returns are net of fees and are calculated on annual changes in net asset value. They may differ from payout distributions.
**Special payouts for fiscal years 2019, 2018 and 2017 are included. 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 both the target composite benchmark and a simple 70 percent equity / 30 percent bond portfolio. 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 through the selection of superior outside investment managers.
The endowment outperformed the composite benchmark, as well as the 70 percent equity / 30 percent bond portfolio, for all periods.
Secondary Investment Objective:
Annualized Total Return ≥ Composite Benchmark
As of June 30, 2022
| 3-Year | 5-Year | 10-Year | 20-Year | |
|---|---|---|---|---|
| Northwestern University | 12.0% | 10.3% | 9.5% | 9.1% |
| Composite Benchmark | 10.1% | 9.6% | 8.9% | 8.3% |
| Global 70% Equity / 30% Bond Index | 4.3% | 5.4% | 6.7% | 6.4% |
Tertiary Investment Objective
A third performance objective is realizing investment returns competitive with those of peer institutions. According to an annual comparative study of the returns of colleges and universities by Cambridge Associates, for the period ending June 30, 2022, Northwestern performed in the top quartile for the 20-year period and in the second quartile for all other periods.