Over the past decade, the Commonwealth Fund’s endowment returns have benefited from global economic recovery and low inflation. In the most recent fiscal year, endowment performance has been strong, primarily because of the sustained outperformance of U.S. equities.
Over the one-, three-, five-, and 10-year periods ending June 30, 2018, the net return on the Fund’s endowment has been 7.4 percent, 4.8 percent, 6.9 percent, and 5.0 percent, respectively.
These returns are modestly lower than the passive benchmark returns of 70 percent global equities and 30 percent global fixed income. During the last two quarters of the fiscal year, in early 2018, there was a return to more typical levels of market volatility. A brief 10 percent correction in the S&P 500 in February broke the 15-month consecutive streak of positive market returns. The performance of the market and the endowment reflected the tension between a variety of economic and geopolitical concerns, including the specter of a trade war, balanced against continued economic growth, particularly in the U.S., and the stimulating impact of the tax plan.
During the 2017–18 fiscal year, the Fund increased its spending and distributed $36.4 million, a distribution ratio of 4.8 percent. Recognizing the opportunity created by strong investment performance, the Fund modestly increased its planning budget for the 2018–19 fiscal year to $36.5 million, to support its role in informing health policy and promoting a high-performance health system.