Foundations Post -26% Return for FY2008

According to the report, top decile performers returned an average of -13.9% and top quartile performers averaged a return of -19.1%. The average annual three-year return for the total study group was -3.1%. Top decile institutions report an average annual three-year return of 2%, and top quartile performers report an average annual three-year return of 0.2%.

The only asset class reporting a positive return for FY2008 was fixed income, with 0.6%, the report said. The poorest return came from international equities, -41%, with domestic equities not far behind at -36.3%. Within the broader category of alternatives — which declined 16.4% overall l— marketable alternative strategies (including hedge funds) returned -19.4%. The longer-term, more illiquid strategies fared best: venture capital, -6.2%; private equity, -7.8%; and private equity real estate (non-campus), -8.8%.

Study participants overall reported a 16% allocation to fixed income, compared with 7% for the top decile and 9% for the top quartile. Overall, participating foundations raised their allocation to alternative strategies by eight percentage points to 36%, still behind the 49% and 48% allocations of the top decile and top quartile, respectively.

The study found sharp, across-the-board declines in the international equity allocation — to 8% from 20% for the top decile, to 11% from 21% for the top quartile, and to 15% from 20% for study participants in general. Domestic equity allocations declined to 27% from 32% for the study population as a whole, but rose to 28% from 23% for the top decile.

In a reversal from recent years, the report said, the Leaders had larger allocations to short-term securities/cash/other — an average of 8% for the top decile and 7% for the top quartile. For foundations overall, the allocation was 6%.

The report can be ordered by emailing cf_orders@cfund.org .