This weekend I was listening to a very popular financial planning radio show on WJR.  Yes, I am that geek.  On Sunday mornings, right after hockey, I like to listen to the Ric Edelman radio show on my drive home.  I find it interesting to listen to the topics that are on the national mindset of regular people needing financial planning.

This weekend was particularly interesting in that the discussion was around investment performance for the past 12 months of some of the nation’s most widely respected endowment funds.  Ric started his discussion by asking his listeners about how they “feel” their investments have performed over the past twelve months.  He then proceeded to remind his listeners that performance without a comparison (aka benchmark) wasn’t relevant.  He then proceeded to give the performance of these endowments, with the lowest performing coming in around -3.4% and the highest performing at +3.4%. 

I researched some endowments this morning (not in my car) and the results were as advertised.  Below I compiled a list.  It is notable that the list is separated by a spread of under 7%.

In the last 12 months, ending September 30, 2016, the results (as found on my Google search for Endowment Investment Performance) are…

Yale +3.4%

Princeton +.8%

Stanford  -.4%

University of PA -1.4%

University of VA -1.4%

University of Washington -1.6%

University of Iowa -1.75%

Harvard -2%

UNC -2%

University of Colorado -2.5%

And bringing up the rear

OSU -3.4%

University of California -3.4%

Ric’s point was that the boards of directors of these endowments weren’t going to “fire” the investment professionals, because they are geared to look at performance over a much longer time horizon.  A year is simply too small of a sample size.  It does, however, allow investors a glimpse into the difficulties that this recent market has created for most people. 

I actually think there are two lessons here for investors.  The first lesson is to look at your performance against a suitable benchmark, one that makes sense to you.  Without the comparison you really don’t know where you stand.

The second lesson is not to focus too intently on year by year performance, but over a much longer time horizon (three, five, and ten year timeframes are more telling).  With the news media pushing viewership by hyping the day to day movements in the financial markets, and the financial services companies trying to convince investors to make different decisions driven by fear/greed, it is even more important that investors stay vigilant in their approach to investing.  As always, we at Gainplan recommend that our planning clients agree on a risk adjusted strategy that fits their objectives and stay the course with that strategy for the long-term.  Just my two cents.  And apparently Rice Delman (aka Ric Edleman) agrees.

This commentary on this website reflects the personal opinions, viewpoints and analyses of the Gainplan LLC employees providing such comments, and should not be regarded as a description of advisory services provided by Gainplan LLC or performance returns of any Gainplan LLC Investments client. The views reflected in the commentary are subject to change at any time without notice. Nothing on this website constitutes investment advice, performance data or any recommendation that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person. Any mention of a particular security and related performance data is not a recommendation to buy or sell that security. Gainplan LLC manages its clients’ accounts using a variety of investment techniques and strategies, which are not necessarily discussed in the commentary. Investments in securities involve the risk of loss. Past performance is no guarantee of future results.