Notre Dame CIO: No other asset class has benefited the university and its students as much as private equity
August 20, 2012
In a piece published in Pensions & Investments today, University of Notre Dame Chief Investment Officer, Scott Malpass, highlights the value private equity investments bring to The Notre Dame Endowment. Mr. Malpass chronicles what investment in private equity has meant for Notre Dame:
The University of Notre Dame’s endowment provides nearly $100 million in financial aid annually to help students pay for college. Less than a generation ago, in 1990, the number was around $5 million. We’ve been able to keep pace with the rapidly growing financial needs of our students, in part, by making smart investments in private equity
Thousands of students at Notre Dame are able to earn a college degree because of the returns that private equity provides our endowment. But this fact is seemingly missing from the current debate about the industry. It shouldn’t be. Private equity is instrumental in helping university endowments and other foundations and charitable enterprises carry out their missions.
The piece reveals that Notre Dame allocates more than 25 percent of its endowment to private equity. These investments providing Notre Dame with the needed resources to achieve their mission
Notre Dame’s private equity investments have generated more than $2 billion of incremental return to the endowment, providing the university with the needed resources to fund capital improvements, pay staff salaries, and increase financial aid to students. No other asset class has benefited the university and its students as much as private equity.
Private equity is an essential asset class for pension funds, charitable foundations and university endowments. Without returns from private equity, nurses, firefighter, teachers would be less secure in their retirements and college students might not have access to badly needed financial aid. As Mr. Malpass says in the piece, “[i]t is safe to say that Notre Dame would not be the university it is today without our partnership with private equity.”
The Notre Dame op-ed come on the heels of another report, highlighted by Pensions & Investments, from Cliffwater LLC, found that manager selection in private equity is important because of diversity of returns. Ten year annualized median returns for private equity at 10.2 percent, however, still outperform the U.S. Stocks (3.7%), Non-U.S. Stocks (7.4%), U.S. bonds (6.3%) and real estate (7.3%).
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