Since the 2008–09 fiscal crisis, the Commonwealth Fund’s endowment performance has benefited from a favorable investment climate, the global economic recovery, and low inflation. In the most recent fiscal year, the endowment returns have been exceptionally strong, assisted by the robust performance of global equity markets and the overweight in this sector.
Over the one-, three-, five-, and 10-year periods ending on June 30, 2017, the net return on the Fund’s endowment has been 12.3 percent, 4.5 percent, 8.1 percent, and 4.5 percent, respectively. These returns are generally in line with the passive market benchmark returns of 70 percent global equities and 30 percent global fixed income. As of June 30, 2017, the U.S. equity market posted its seventh consecutive positive quarter with low volatility.
Equity markets outside the U.S. performed even more strongly, as a declining dollar supported asset values and resulted in the strongest last two quarters for global equities since 1998. Broadly, the global credit markets benefited from a similar calmness during last year.
The increasing value of the Commonwealth Fund’s endowment has enabled the organization to grow expenditures in support of its mission over the past five years. During fiscal year 2016–17, the Fund increased its expenditures 3.0 percent, to $34.6 million, and maintained a distribution ratio of 4.9 percent.
Cognizant of the challenges to continued strong investment performance and the stability required to balance ongoing investments in intramural research, communications, and program management with extramural grant making, the Commonwealth Fund took a relatively conservative approach to forecasting the current year’s budget. To support its role in informing health policy and promoting a high performance health system, the Fund maintained its budget at $35 million for the current 2017–18 fiscal year.