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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 the one- and five-year periods, as well as the 15-year period.

Primary Investment Objective:
Annualized Total Return Spending + Inflation

As of August 31, 2017

  1-Year 3-Year 5-Year 10-Year 15-Year
Annual Total Return* 11.7% 5.3% 8.7% 5.6% 9.0%
- Spending 4.9% 4.2% 4.1% 4.1% 4.1%
- Mgmt & Admin Fee** 0.7% 0.7% 0.7% 0.7% 0.6%
- Inflation 1.9% 1.1% 1.3% 1.7% 2.1%
=Above(Below) Objective 4.2% -0.7% 2.6% -0.9% 2.2%

*Total returns are net of fees and are calculated on annual changes in net asset value. They may differ from payout distributions. A special payout for fiscal year 2017 is 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 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 (U.S. 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 Endowment has outperformed the composite benchmark for the most recent fiscal year. Longer term, the portfolio has outperformed the policy benchmark for the five- and 15-year periods and essentially matched it for the three- and 10-year periods.

Secondary Investment Objective:
Annualized Total Return Composite Benchmark

As of August 31, 2017

  1-Year 3-Year 5-Year 10-Year 15-Year
Northwestern University 11.7% 5.3% 8.7% 5.6% 9.0%
Composite Benchmark 11.5% 5.3% 8.1% 5.7% 8.2%

 

Tertiary Investment Objective

A third performance objective is realizing investment returns competitive with those of peer institutions. According to an annual study by Cambridge Associates, which provides comparative data on returns of peers, Northwestern performed in the third quartile for the one-year period, but in the top quartile over the three-, five-, and 10-year periods.