Graphic: For endowments and foundations, equities bring benefit, risk
Large private foundations and endowments outside of higher education vary in how concentrated their investment portfolios are, with the Bill & Melinda Gates Foundation Trust and Lilly Endowment relying heavily on a select number of equities. While certain stocks, such as Eli Lilly & Co., have performed well, concentrated portfolios have idiosyncratic risks that could impact future returns.
Allocations vary: Equity investments by the five largest private foundations and endowments varied from the Ford Foundation's 2.2% to the Lilly Endowment's 90.9% — solely in Eli Lilly shares. The Ford Foundation lowered its equity to about 2% from nearly 39%, while increasing its allocation to alternatives/other.
Year-end equity allocations*
Concentration: Eli Lilly stock makes up most of the Lilly Endowment's investment portfolio despite a reduction to 102.9 million shares at the end of 2022, from 135.7 million in 2012. Nonetheless, the value increased to $37.7 billion from $6.7 billion during that period. Despite Warren Buffett's annual donation of Berkshire Hathaway stock to the Bill & Melinda Gates Foundation, its share count has decreased by 72% over the past decade. The foundation has also increased its ownership of Canadian National Railway Co., Deere & Co. and Waste Management Inc.
Value of major equity holdings (billions)
| Institution | Stock | 2012 | 2017 | 2022 |
|---|---|---|---|---|
| Gates Foundation | Berkshire Hathaway Class B | $7.8 | $12.6 | $7.6 |
| Gates Foundation | Canadian National Railway | $0.8 | $1.4 | $6.5 |
| Gates Foundation | Caterpillar | $0.9 | $1.8 | $1.8 |
| Gates Foundation | Deere | $0.0 | $0.0 | $1.7 |
| Gates Foundation | Microsoft | $0.0 | $4.1 | $9.4 |
| Gates Foundation | Waste Management | $0.6 | $1.6 | $5.5 |
| Lilly Endowment | Eli Lilly | $6.7 | $10.4 | $37.7 |
| Johnson Foundation | Johnson & Johnson | $0.9 | $1.8 | $2.1 |
Equity performance: Eli Lilly stock returned an annualized 22.6% over the decade ended March 31, trouncing the S&P 500 index's 12.2% return. Caterpillar, Waste Management, Deere and Microsoft stock also all bested the index over 10 years, but Berkshire Hathaway's share performance trailed the overall market.
Performance of largest positions
| Stock | One-year return | Five-year return | 10-year return | P/E ratio |
|---|---|---|---|---|
| Berkshire Hathaway Class B | -12.5% | 9.1% | 11.5% | 22 |
| Canadian National Railway | -10.4% | 12.0% | 10.8% | 22 |
| Caterpillar | 5.1% | 11.9% | 13.3% | 15 |
| Deere | 0.7% | 23.4% | 19.3% | 15 |
| Microsoft | -5.6% | 27.3% | 28.3% | 31 |
| Waste Management | 4.6% | 16.2% | 18.0% | 29 |
| Eli Lilly | 21.4% | 37.2% | 22.6% | 43 |
| Johnson & Johnson | -10.2% | 6.7% | 9.6% | 19 |
| S&P 500 | -7.8% | 11.2% | 12.2% | 18 |
*Ford Foundation 2009 data are as of Sept. 30. Sources: Pensions & Investments, IRS 990-PF, SEC filings, Bloomberg LP
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