Fifty-six healthcare organizations participated in the 2016–2017 Commonfund Benchmarks Study® of Healthcare Organizations. These organizations reported an average investable asset pool of $2.1 billion as of December 31, 2017, and median investable assets of $987.0 million as of the same date. (Investable assets include endowment/foundation funds, funded depreciation, working capital and other separately treated assets).
Thirty-two participating organizations reported an average DB plan market value of $2.0 billion as of year-end 2017, while the median market value of their DB plans as of the same date was $481.0 million. The Study separates data from the 56 participants into three size cohorts: institutions with investable assets over $1 billion; those with investable assets between $501 million and $1 billion; and those with investable assets under $501 million. Following is a summary of the major findings in the report.
Summary of Major Findings
1 |
The 13.2 percent 2017 return on investable assets was the highest return since 13.3 percent reported for 2013. (Returns are reported net of fees.) |
2 |
Long term (the trailing 10-year period) average annual returns remain below 5.0 percent (4.6 percent for 2008 to 2017). |
3 |
The 2017 investable assets allocation to alternative strategies declined to 25 percent from 28 percent in 2015, continuing the reversal of a trend that reached its high point with an allocation of 31 percent in 2013. |
4 |
Allocations in 2017 to U.S. equities and fixed income were moderately higher than they were in 2015 but remain well below the upper 30 percent/lower 40 percent level reported when the Study commenced (for 2002). |
5 |
Professional staff devoted to managing the investment function showed an increase among institutions with assets under $501 million, where the average number of full-time equivalent employees (FTEs) more than doubled to 1.1 in 2017 versus 0.4 FTE in 2015. |
6 |
Returns on defined benefit (DB) plan assets were higher than those earned by investable asset pools. This may be attributed, in part, to a larger allocation to non-U.S. equities, which performed strongly over the two-year period, and a smaller allocation to short-term securities/cash/other. |
7 |
At year-end 2017, 57 percent of participating institutions’ U.S. equities allocation was actively managed and 43 percent was passively managed—a clear change since 2014 when the active/passive split was 65/35. This may reinforce observations in earlier Studies concerning the shift to passive management of highly efficient asset classes, such as U.S. equities. The allocation to actively managed non-U.S. equities also declined. |