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Cornell’s investments grew 5.3% in FY2019

Cornell University’s endowment earned a 5.3% return for the fiscal year ending June 30. The investments reached $7.3 billion, a new record.

The endowment’s gains in real estate and equities led the performance.

“This is a solid result relative to our efforts to restructure the portfolio and the constraints that come with those efforts,” said Kenneth Miranda, the university’s chief investment officer. “We’re seeing a lot of very promising indicators across asset classes as we work to get our portfolio positioned correctly.”

The university’s holdings include a globally diversified mix of equities, bonds, real estate and commodities. The 5.3% figure matched the university’s overall strategic benchmark, against which the investment office measures its success. Matching the benchmark is “a noteworthy achievement,” Miranda said, given that the portfolio’s restructuring is still underway.

The Office of University Investments began restructuring its portfolio in 2016, when Miranda, then director of the International Monetary Fund’s investment office, joined Cornell as CIO. “We are continuing to reposition the portfolio,” he said, “slightly constrained by the illiquidity [assets not easily converted into cash] associated with many legacy investments that we’re working to convert into new positions.”

The real estate portfolio, one of the first the office restructured, generated a return of 10.9%, outperforming its 6.5% benchmark.

And the university’s equities investments, both public and private, earned a 9.2% return. That was driven by private equity, with a 18.2% return – a strong performance by any measure, Miranda said.

Over the past three fiscal years, the portfolio’s growth is a “respectable” 9.4%, Miranda said.

Also during the 2019 fiscal year, the office closed its Ithaca headquarters, finished moving to its current New York City office, completed recruitment of an entirely new operations team and added two investment team members.

“As envisioned, the move to New York City expanded the office’s ability to recruit talent at all levels of the organization and brought the office closer to the capital markets,” Miranda said. “With a revamped team and approach in place, the office is significantly better positioned. Improved training, additional experience and the significant buildout of information systems will further enhance the ability of the team to execute the mission.”

Thanks to the endowment’s overall performance, the investment team has been nominated for two awards by its peers. The Cornell University Board of Trustees’ Investment Committee was nominated for Investment Committee/Board of the Year in the Allocators’ Choice Awards, run by Institutional Investor, an international finance publication. The committee “… has pulled off a stunning turnaround thanks to ‘very strategic’ and ‘long-game’ decisions … ,” the publication said. And Cornell, led by Miranda, was nominated for the Turnaround of the Year award.

Cornell was the only institution to receive two nominations. Award winners will be announced in December.

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Rebecca Valli