Ford Releases Investment Returns; More Grant Makers May Be On the Way
For the first time in several years, the Ford Foundation disclosed the investment performance of its $12.1 billion endowment, saying it generated a return of 7 percent in 2016. By comparison, the median return of more than 5,700 foundations that have filed their tax returns for 2016 was 7.24, according to Foundation Financial Research, a start-up company that has built a database of foundation endowments at FoundationMark.
For the five years ending last December 31, Ford said its endowment generated a 9.2 percent return, outperforming the median return of 7.72 percent for the foundations that FoundationMark tracks. Endowment performance is best assessed over longer time periods because year-to-year returns can fluctuate.
Meantime, over those same five years, a sample portfolio of low-cost, passively invested index funds from Vanguard, with 70 percent invested in stocks and the rest in fixed-income securities, delivered a 9.1 percent annualized return. Those returns lagged just behind the Ford Foundation but well ahead of the foundation averages.
What that means is that as a group, U.S. foundations, which have a collective $800 billion in assets under management, would have done better during the past five years if they had ignored active portfolio managers — that is, people who pick stocks and try to time the markets — and simply held low-cost index funds. Individual foundation returns vary, of course, and it’s possible that actively managed portfolios will beat indexes from time to time...