From the Director
General of Administration

In 2014/15, INSEAD, as an independent school, was able to balance its budget and strengthen its resources to support and develop its teaching and research activities in the long term.

With revenues of €210 million, INSEAD is one of the world’s largest business schools in budgetary terms. The majority of revenues (85%) come from programmes, split equally between Degree Programmes and Executive Education.

Revenues from Degree Programmes come essentially from the MBA programme (75%), with over 1,000 participants graduating in 2015. Executive MBA programmes confirm their high positioning in rankings and success. The Executive Master in Coaching and Consulting for Change is a unique proposition with high demand.

In Executive Education, applications to open enrolment programmes remained strong even in Europe despite a challenging economic environment. We also delivered more than 280 weeks of customised company-specific programmes on our three campuses around the world.

The new Executive Education customised online programmes developed for two large companies were major successes and this activity will be an opportunity for long-term growth.

External funding represented 8.6% of our budgetary resources. In addition to revenues from endowments, it includes generous support from alumni and friends of the school in the form of gifts.

At €190m, INSEAD’s endowment is among the largest of leading business schools outside the USA. It increased by 8.8% in 2014/15, to a large extent due to financial performance.

In 2014/15, INSEAD balanced its budget despite a challenging economic environment in Europe and cost increases in Asia due to the drop of the euro. However, thanks to a diversification of our revenues and preventive currency hedging on operations, the currency impact was very limited.

2014/15 was a year of ambitious qualitative investments for the future: reorganisation and reinforcement of the Career Development Centre; upgraded sales team in Executive Education; preparation and new advancement resources for a development campaign; branding and communication strategy and initiatives; launch of company-specific Executive Education customised online programmes; inauguration of the new Leadership Development Centre in Singapore, and master plan study for the future renovation of the campus 
in Fontainebleau.

The cash situation of the school remains very positive in spite of these investments and the decision to anticipate the repayment of two ancient mortgage loans (€4m).

2014/15 was a positive year, confirming INSEAD’s financial health but also its urgent need to invest, with the support of its community, to prepare the school for new challenges and opportunities.

Eric Ponsonnet

Thanks to solid financial health and several years of strong surpluses, INSEAD has initiated major qualitative investments for the future.

Eric Ponsonnet

Financials Indicator

In €'000 2015 2014
Total income 210,465 201, 007
Operating cash flow 9,733 14,360
Cash flow from endowment
(transfer to operations)
6,606 6,238
Net cash flow from financing (1,448) (1,351)
Net cash flow used in investing (17,223) 17,841)
Interest paid (2,347) (2,287)
Changes in working capital & exchange losses/gains (814) 8,361
Cash flow -5,493 7,481
Cash at year end 52,875 58,368
Endowment at beginning of the year 174,164 160,950
Donations received, net 3,585 2,041
Gains and losses from investment activities 18,517 17,411
Transfer to operations (6,606) (6,238)
Endowment at year end 189,660 174,164
Endowment performance rate 10.6% 10.8%
Spending rate 4.0% 4.0%

As a not-for-profit institution with entities in various countries, INSEAD is not required to publish consolidated accounts, but all its statutory accounts are audited. A governance structure has been implemented with several committees of the Board of Directors responsible for Audit, Finance and Risk, Endowment Management and Remuneration. The following financial indicators are directly extracted from audited combined accounts based on IFRS accounting standards.

Revenues 2015

Expenditures 2015

Investing INSEAD’s Endowment

Overview of the INSEAD Endowment

INSEAD’s €190 million endowment supports the school’s mission and provides a permanent source of funds to build its competitive advantage. It allows INSEAD to plan, sustain and invest in faculty chairs, research projects, programmes, scholarships and facilities. A robust endowment is fundamental for INSEAD’s growth; building it is a high priority for 
the school.

The INSEAD endowment is managed by the Endowment Management Committee originally formed in 1995, and has been advised by Partners Capital since the beginning of 2007. Partners Capital advise on the €177m investment portfolio with a further €13m invested in directly held property, cash and other assets. The endowment remains well positioned for both capital preservation and long-term capital appreciation through a diversified multi-asset class investment strategy with the portfolio populated with allocations to specialist asset managers of the very highest quality, similar to those of leading educational endowments around the world.

Investment Strategy

The core tenets of INSEAD’s investment strategy remain: (1) to manage the portfolio to deliver long-term absolute returns without specific regard to income generation, (2) to diversify the portfolio across multiple asset classes, (3) to identify and select the most skilled asset managers within each asset class and (4) to take into account ethical, social and governance issues when deciding on investments. We believe that this combination will result in long-term outperformance of the INSEAD endowment relative to more traditional investment strategies.

The endowment remains broadly diversified across a variety of asset classes, including traditional allocations to equities and corporate credit and alternative allocations including hedge funds and private equity. The identification and selection of “best-of-class” investment managers is at the core of the investment strategy and a key source of the endowment’s outperformance versus benchmarks. The total expense ratio of the portfolio is closely monitored to ensure that it is invested only in those managers whose performance justifies the fees. The portfolio also aims to generate outperformance through a small number of tactical asset allocation skews.

As of August 2015, the €177 million investment portfolio (excluding “Other Endowment Assets”) was invested broadly across various asset classes. As a long-term growth portfolio, the endowment is biased towards global equities, both public and private equity, with exposures to other asset classes which we believe will perform well in certain environments providing diversification benefits.

Currently, the portfolio is underweight nominal government bonds given the opportunity cost of the allocation at current yields. The portfolio is overweight public equities that compensates for the underweight allocation to private market strategies including Private Equity and Private Equity Real Estate. The long-term target allocations to private market strategies were increased last year. Taking advantage of the school’s long-term time horizon to access the illiquidity premium inherent in these strategies should serve to enhance portfolio returns to the benefit of our school. The portfolio maintains an allocation to credit with most of the exposure in structured credit and peer-to-peer lending.

From March 2007 to the end of August 2015, the investment portfolio has returned +42.0% (cumulatively) after deduction of fees and expenses. This represents +16.2% outperformance of the INSEAD Composite Benchmark, a custom benchmark reflecting the long-term strategic asset allocation adopted by the Investment Committee, which returned +25.8% over the same period.

In 2014/15, the INSEAD investment portfolio returned +10.9% outperforming the INSEAD Composite Benchmark which fell -0.3%. This outperformance was achieved through a combination of performance of the underlying asset managers, tactical asset allocation tilts and the appreciation of the portfolio’s unhedged US dollar exposure. The major contributors to the portfolio’s performance were the allocations to Hedged Equities (+13.0% performance in the year) and Private Equity (+14.7% performance in the year). These returns compare to the +1.9% return for the global equities over the same period. The backdrop of increased dispersion of individual stock price performance provided a fertile environment for the active managers in the Hedged Equity portfolio. The private equity managers took advantage of buoyant equity and credit 
markets to exit positions at attractive valuations.

I am grateful to the Endowment Management Committee for their time and insight and the donors for their kind contributions to the endowment.

Rémy Best MBA’93D
Chairman, INSEAD Endowment Management Committee

Remy Best
Rémy Best


Academic Year 2007 2008 2009 2010 2011 2012 2013 2014 2015 Cumulative
(Mar 07 – Aug 15)
INSEAD investment portfolio return1 +2.4% -3.0% -11.8% +6.6% +5.4% +8.7% +7.4% +11.5% +10.9% +42.0%
INSEAD endowment return2 +2.2% -1.9% -11.2% +5.7% +4.7% +7.8% +7.0% +10.8% +10.6% +39.3%
INSEAD Composite Benchmark3 +1.8% -2.0% -13.6% +4.0% +8.3% +6.4% +9.1% +12.0% -0.3% +25.8%

Note: The academic year starts on 1 September and finishes on 31 August. This is reflected in the table above. For example, the year labelled 2015 reflects performance from 1 September 2014 to 31 August 2015. The year labelled 2007 includes only 1 March 2007 to 31 August 2007

1 INSEAD Investment Portfolio consists of the Partners Capital managed portfolio.

2 The INSEAD Endowment Return consists of both the Partners Capital managed portfolio and all other assets including direct property, cash and other assets.

3 The INSEAD Composite Benchmark is a custom benchmark comprised of asset class indices (e.g. MSCI World NR LC for the equity allocation or State Street Private Equity Index for the private equity allocation) and weighted to reflect the long-term strategic asset allocation adopted by the committee.