The Underperformance of the University of Illinois Foundation Endowment, Fiscal Years 2016–2026

This paper evaluates the investment performance of the University of Illinois Foundation endowment pool against the benchmark the Foundation designates for itself, over the eleven fiscal years from July 2015 through June 2026. Using public documents, we find that the pool returned 6.94% a year against 9.09% for its benchmark and trailed it in nine of eleven years. Holding gifts and spending fixed, the pool would have been about $771 million (25%) larger on June 30, 2026 had it earned the benchmark return. Roughly 98% of that shortfall accrued in fiscal years 2023–2026, the first four years in which the benchmark was an investable 70/30 global equity and bond index. Over the ten years through June 2025, the pool also had the lowest return of the 15 Big Ten public pools with a complete record, 6.68% a year against a median of 8.14% for the others, and, over all available years, the lowest estimated alpha after adjusting for exposure to global stock markets. Where the published data permit a decomposition, most of the shortfall arises within asset classes, including manager selection and private investments, rather than from asset allocation. While the Foundation says it does not engage in market timing, its reports also describe shifting money based on market views, and its Form 13F filings show large shifts in the directly held portfolio, from broad index funds to individual stocks and sector funds, and into and out of long-term Treasuries. These patterns are consistent with evidence on the difficulty of identifying superior active managers in advance, and suggest that a low-cost index implementation of the Foundation’s own benchmark would have produced materially better outcomes.