Unpacking WU’s unprecedented $5.7 billion endowment pool growth

| Staff Reporter
A red brick facade of a building with two round towers stands in front of a pale blue sky. A clockface and windows can be seen in the center of the building, while two red and white flags can be somewhat seen behind the towers on each side.Curran Neenan | Student Life

Brookings Hall is on the East End of campus.

Following last week’s announcement that the Washington University managed endowment pool grew by 65% during the 2020-2021 fiscal year to $15.3 billion, community members are questioning how the additional funds will be used, but the administration has yet to elaborate on specific plans for the gains.

Chancellor Andrew Martin wrote in a statement Sept. 20 that this “remarkable return will allow us to take a huge step forward, and I look forward to sharing our plans with our university community in the coming weeks.”

The University typically allocates around four percent of the endowment towards its budget each year. Last year, endowment distribution spending was $315 million. If that figure grows proportionally with the endowment, distribution spending could potentially be around $600 million, though such a decision is still up to the Chancellor and the Board of Trustees.

Many students hope this boost to the University’s budget could be used to fund different measures to make the University more equitable and supportive of its community members.

“We are really excited to see such a massive return because some of the things we have been focusing on require a lot of capital investments from the University,” Student Union President Ranen Miao said. “Our biggest priority [for the funds] is moving the University toward need-blind admissions. It’s honestly really embarrassing that WashU is the only top 20 school in the nation that has not gone need-blind yet.”

Miao explained that it is imperative for SU that the University become accessible and able to meet the needs of students from all socioeconomic backgrounds.

Though need-blind admissions were absent from the statement from the University on the endowment increase, Chancellor Martin said in 2019 that “I think it’s our moral responsibility to become a need-blind institution as quickly as possible.”

Miao added that after pursuing need-blind admissions, SU’s next priorities include mental health support and ensuring further ethical investments. “We need to tackle the [University’s] mental health crisis by investing in more counselors and more support staff,” he said. “We [also] need to advocate for the University to move toward divestment from fossil fuels. We want to make sure we are earning our money in a way that is more ethical.”

For Fossil Free WashU, a group pushing to freeze and divest University’s investment in fossil fuels, the news about the endowment’s growth has the potential to draw more attention to the need for divestment.

“I think [the news about the growth] will help our group’s goals,” Fossil Free WashU members senior Jared Moxley said. “Anything we can learn about the endowment is good, because right now, we know almost nothing about it. Bringing more attention to the endowment will encourage people to ask questions about it like, ‘how did it get to this size?’ News like this will bring student attention, and student attention is always our number one leverage.”

Although this last year was one of the strongest in the University’s history, Chief Investment Officer of the Washington University Investment Management Company (WUIMC) Scott L. Wilson told Student Life that continued and sustainable growth in the “super long term” remains a major priority.

“We don’t have a one-year strategy, we expect that there will be some good years and some bad years,” Wilson said. “But over the long term, we expect to perform better than the market, relative to our peer group [of universities]. We are looking out for the next generation of students, staff and faculty.”

WUIMC began implementing significant portfolio changes in 2017, the year Wilson took over as CIO. Now, according to Wilson, these changes are beginning to pay off.

“We have overturned the vast majority of our portfolio,” Wilson said. “At this point, we have probably reallocated six of the seven-and-a-half [to] eight billion dollars of the original endowment, from when I took over.”

This year’s success is a notable shift from last year, when the onset of the COVID-19 pandemic caused national university endowments to generate their lowest returns since 2016 as markets crashed.

However, even during that period marked by falling returns, the University found itself performing comparatively well. It secured the second-best change in market value, 5.87%, out of the top 15 largest institutional endowments. It was outperformed only by the University of Notre Dame, which boasted a 6.16% change.

Wilson said that the University’s relatively strong performance during the pandemic can be attributed to its well-diversified portfolio. Holding stocks of companies that were unaffected or even benefited from the pandemic helped the University keep a steady position last year.

This year, it is those companies that are benefiting from a return to normalcy that are pushing the University’s returns, he added. The University appears to be one of the top performers of the 2020-21 fiscal year out of its peer institutions. “So far we look to be the one highest if not the highest returns for large endowments,” Wilson said.

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