Renewable Fuel and Sustainable Energy Charge Up University of Michigan Endowment’s Return

By David G. Barry 

Renewable fuel and sustainable energy received credit for the University of Michigan’s impressive performance for the 2021-22 fiscal year.

The school said its long-term investment portfolio had a gain of 2.2% during the fiscal year, one of the highest reported to date by a university endowment. So far, the only one higher is the Kansas State University endowment, which said it had a 5.7% gain.

U-M also becomes the third Big 10 school to report a positive gain, joining Pennsylvania State University which produced a 0.1% and Ohio State University which had a 1% return. In contrast, just one of the Ivy League Schools – Yale University – has reported a gain at this point.

U-M said its endowment increased by $324 million to $17.3 billion and it distributed $434 million to a variety of university functions during the fiscal year.

The school said that its 20-year annualized return was 9.9%. The median 20-year annualized return among college and university endowments was 7.4%. The university’s endowment is a collection of more than 12,400 separate endowment funds, which provides support for educational programs, research and professorships.

In a statement, U-M Chief Investment Officer Erik Lundberg said, “our investments in renewable fuel and sustainable energy contributed significantly to the positive performance last year, along with other investments that responded well to inflation.”

U-M did not release details on how specific parts of its portfolio did. It said that Lundberg will share a detailed presentation on the endowment at the university’s board of regents meeting in December.

It’s likely alternative assets – especially venture capital – also played a role in the strong year. As of July 31, it had 63.6% of its portfolio in alternative assets – with venture capital the largest segment at 29.5%. Private equity was at 13.7%, natural resources at 11.1% and real estate at 9.4%.
Marketable securities comprised 36.4% of the portfolio.