By Piper Rutherford | Staff Writer
Baylor’s five-year endowment return rate landed second place in comparison to Ivy League universities.
Baylor Chief Investment Officer David Morehead said that rather than focusing on fiscal year return rates, his office prefers to analyze five years’ worth of returns at a time.
“The graph shows the annualized returns for the last five years, since it does not make sense to go annually, when anything could happen in a single year,” Morehead said. “For example, if you look at the last five years now, this includes the year that ended in 2019 when tax dockets were up, the following two years impacted by the pandemic when the stock market went from being down to being up, as well as 2022 and 2023, which all together provide a much better picture of how your endowment did in the different environments over that time frame.”
Morehead said that most of the other schools on the chart have significant venture capital investments, but Baylor does not, making the university’s appearance on the list notable.
“Venture capital is investing in private companies at the earliest stage of their formation,” Morehead said. “It is like investing in an idea before it hits the market, which is the reason as to why most of the Ivy league schools have extensive venture capital portfolios that helped them all in the fiscal year of 2021.”
Morehead said that in 2021, while MIT’s one-year return was up 56%, Baylor’s was 39%.
“However, in 2022, MIT was down 5.3%, followed by 2023, when they were down 2.9%%, unlike us, who went up 1.2% in 2022, and then up again by 6.4% in 2023,” Morehead said. “So, in this example with MIT, if you looked at just the fiscal year of 2021, you would think that MIT was way ahead of us, but if you look at the graph, which covers the five-year period, Baylor is outperforming MIT.”
Given the success of endowment returns over the past five years, Morehead said his office has a goal to continue to grow the endowment, so that for every billion dollars the endowment accrues, there is an additional $50 million that goes to student scholarships and programs.
“My office is not satisfied with being No. 2, especially since the team is filled with Baylor alumni who want to outperform and beat the Ivy Leagues while also working to provide scholarship funds and alleviate tuition costs for Baylor students,” Morehead said. “I would say that we are even more optimistic for the endowment’s potential returns for the next three or four years, and our goal is to double the $2.3 billion endowment to $4 billion so that we can give $200 million a year — rather than $100 million a year — to student scholarships.”
Outside of providing scholarships for tuition, there are other areas where Baylor plans to invest these funds. President Linda Livingstone said that the Strategic Plan for 2030 is guided by the pillars of providing transformational educational experiences for undergraduates, impactful research scholarships and graduate education and renowned programs in the arts and athletics.
“These are all non-negotiable,” Livingstone said. “The imperatives are affordability, value and completion for our students, a focus on health and engineering, an emphasis on the human technology interface and then also an emphasis on civil discourse and engaging with others with respect.”
There is a lot to celebrate thus far in the plan, Vice President and Provost Dr. Nancy Brickhouse said.
“We have been breaking records,” Brickhouse said. “First to second year retention of our undergraduate students is at 91%, and we are looking forward to a four-year graduation rate of about 71%.”
