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. Request a copy of the full report.
Summary of Major Findings
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.)
Long term (the trailing 10-year period) average annual returns remain below 5.0 percent (4.6 percent for 2008 to 2017).
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.
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).
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.
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.
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.