Penn’s endowment sees 1.3% return for 2023 fiscal year, increasing to $21 billion

Penn’s endowment saw a 1.3% return rate for the 2023 fiscal year ending June 30, increasing from $20.7 billion to $21 billion.

The 1.3% return rate was notably lower than Penn’s 2.2% composite benchmark return rate. Penn’s total endowment increased by $238.6 million during the fiscal year, according to the Office of Investments. Last year, the endowment saw a less than 1% return rate. For the 2021 fiscal year, however, the endowment posted a 41.1% return rate, largely due to record high stock markets and private equity gains.

According to Penn's annual financial report, Penn spent $975 million in the 2023 fiscal year, up from $876 million in the previous fiscal year.

Of Penn’s total $21 billion endowment, $16.5 billion represents assets supporting the University while $4.5 billion represents assets supporting the University of Pennsylvania Health System. 

The Office of Investments states that the endowment’s growth is powered by investment returns, spending distributions, new gifts, and internal transfers. According to the office, the "vast majority" of Penn’s endowment is invested in the Associated Investments Fund — "a pooled investment vehicle in which the many individual endowments and trusts hold units.”

Pensions & Investments cited Penn's limited allocation of its endowment to public markets compared to its relatively larger allocation to larger funds in the AIF as a probable reason for the relatively low return rate. Pensions & Investments also reported that Penn’s return rate fell short of the median return rate of 3.8% among 17 endowments tracked by the publication.

The University’s 10-year return rate currently sits at 9.7%, above the target benchmark rate of 8.1%.

The endowment supports a range of different functions at Penn. 53% of the endowment is dedicated to instruction, 22% to health care, 15% to student aid, and 10% to research, academic support, and other services.

Yale University’s endowment saw a 1.8% investment return rate for the 2023 fiscal year, while Duke University’s endowment reported a -1% return rate for the same year. Stanford University’s endowment saw a notably high return rate of 4.4%.