Investment returns for 86 nonprofit healthcare organizations were flat in fiscal 2011 following net gains of 10.9 percent in fiscal 2010 and 18.8 percent in fiscal 2009, a new study says.
For those same organizations, average annual net return on investable assets totaled 9.6 percent for the trailing three years, and 1.8 percent for the trailing five years, says the 2012 Commonfund Benchmarks Study of Healthcare Organizations.
Defined benefit plan assets for participating organizations performed better, averaging returns of 1.3 percent, although that also was significantly lower than their average net return of 12.3 percent in fiscal 2010.
Three-year returns for defined benefit plans averaged 11 percent, and five-year returns averaged 2.2 percent.
Participating organizations represented $99.8 billion in investable assets ad $42.4 billion in defined benefit plans as of Dec. 31, 2011.
Healthcare organizations also made a big shift to alternative investment strategies in their asset allocation, increasing those investments to an average of 21 percent of assets in fiscal 2011 from 17 percent in fiscal 2010.
“Healthcare organizations’ higher allocation to alternatives is an ongoing trend that mirrors what we have found in recent annual studies of colleges and universities, foundations and operating charities,” John S. Griswold, executive director of Commonfund Institute, says in a statement.
Among all asset classes, fixed income provided the highest return, an average of 5.4 percent, followed by alternative strategies, 3.9 percent; short-term securities/cash, 0.2 percent; domestic equities, a loss of 0.2 percent; and international equities, a loss of 10.9 percent.
– Todd Cohen