Look out, Ives, there's a new stand-up showrunner in town.
Baylor University's $2 billion endowment — a fraction of the Ivy League's — returned 6.4 percent for the fiscal year that ended June 30, besting the entire conference. Harvard University's endowment, the largest at $50.7 billion, achieved returns of 2.9%.
What's more, Baylor University's 10.9% annual return over the past five years outperformed all Ivy League colleges except Brown University, which posted a 13.3% return over the same period, according to the Wall Street Journal. Brown's endowment in fiscal year 2023 was three times higher than Baylor's $6.6 billion.
The key to the success of Baylor's endowment, according to investment director David Moorhead, is taking advantage of market turmoil.
“It's really driven by managers, and then, if we see, on the edges, … disruption, we can allocate more money into higher yields, allocate more money into [emerging markets] “Something like that,” the former trader told CNBC’s “Halftime Report” last week. “We are truly distributors.”
Moorhead joined the university in 2011, and since fiscal year 2012, Baylor's endowment has doubled.
This increase comes with the recovery of endowment revenues at the national level. Endowment revenues rose 7.7% in fiscal year 2023, according to the latest study by the National Association of College and University Business Officers and Commonfund. By contrast, revenues fell 8% in fiscal 2022.
However, the recent gains are still lower than the returns seen in fiscal 2021, which were 30.6%. This is the second highest average return ever recorded since the NACUBO study began in 1974. The study's highest return to date occurred in fiscal year 1983 at 41.3%.
Morehead said he and his investment team of four others focus on the liquidity of their portfolio as part of their strategy. He explains that assessing these needs in advance is what allows the team to take advantage of market disruptions when they occur.
In a statement to CNBC, Moorhead noted that initial allocations into or out of a sector of the market are triggered by a move of 20% or more in either direction.
“We don’t care at all if the market goes up or down 1-2% a day – we are long-term investors,” he said in the statement.
He also revealed to CNBC that his team is betting on helium, along with biotech and small companies, in the medium term.
The commodity, which is used to make chips and launch rockets, has faced supply shortages in recent years. As the semiconductor industry grows and the number of rocket launches reaches all-time highs, Moorhead expects demand to continue to rise, driving up helium prices.
“Our broader expectation is that big tech companies will start developing their own chips so they are not beholden to them Nvidia “Go ahead,” he added.
