College reports negative endowment return amid volatile market period, follows national trend
October 21, 2022
The College reported an endowment return of negative 7.1 percent for the 2021-2022 fiscal year, which ended on June 30. The negative return follows record-setting growth last year, when the College reported an endowment return of 57.4 percent. This year’s report also marks the first negative return since 2016.
President Clayton Rose emphasized the volatility of the current market in explaining this drastic change.
“A year ago, we reported extraordinary returns, over 57 percent,” Rose said. “We said at the time that these are extraordinary, and we’re almost certain to give back some of this. I’ve been involved in the markets for 40 plus years, and nothing ever goes up like that without some kind of correction. So now we’re seeing that in the markets more broadly, and we’re seeing some of that in our endowment.”
This correction is apparent in the overall movement of the stock market for the most recent fiscal year. During the same period, the S&P 500 and the NASDAQ lost 10.6 and 23.4 percent, respectively. Across higher education, College endowments declined, with a median return of negative 10.2 percent as reported by Bloomberg in August, though colleges with higher endowments—above $500 million—typically fared better. Harvard and Brown Universities reported 1.8 percent and 4.6 percent losses, respectively.
Bowdoin’s endowment is currently valued at approximately $2.5 billion, compared to $2.72 billion at the end of the fiscal year ending in June 2021. The endowment provided $81 million to the annual operations of the College and approximately $38 million to financial aid.
The College reported three-, five- and ten-year annualized returns of 15.7 percent, 14.7 percent and 13.3 percent, indicating continued strong long-term growth.
This year’s numbers also reflect the first full fiscal year under the direction of Senior Vice President and Chief Investment Officer Niles Bryant, who took over from Paula Volent in spring 2021. Volent—who is now serving as Vice President and Chief Investment Officer at Rockefeller University—oversaw unrivaled endowment growth over the course of her 21-year tenure at Bowdoin, earning her widespread respect and acclaim in the financial world.
Rose noted that Bryant, who served previously as Director of Investments, was chosen by Volent and has followed in her legacy of excellence.
“One of the things that’s been great about [Bryant] is that he deeply respects the work that [Volent] did, but also is taking a very clinical view of ‘where are we going to be, not next month or next year, but four or five years from now?’” Rose said. “And then how do we, in terms of where the markets and the opportunities are … make sure that we’re in that spot four or five years from now and ready to take advantage of those kinds of opportunities?”
Rose also explained the role that current high inflation plays in the investment office’s strategy for long-term growth.
“We’re not changing anything about what we do in the short term here, like this year, but we are paying real attention to the possibility of more prolonged inflation, and not only prolonged but also more substantial,” Rose said.
Despite this expected continued inflation, Rose emphasized that the endowment is well-equipped to weather market challenges and support the College’s needs in the long term.
“The good news is we’re very strong and we’re in good shape in terms of our liquidity and the quality of the assets that we have and so forth,” Rose said. “So we’re fine in terms of our ability to maneuver through the kind of environment we have, both from the endowment side and from the operating side.”
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