University endowments fall 19 percent

January 6, 2010

While university endowments' average investment return was negative 19 percent for fiscal 2009, the toll would have been worse without the slight late-year rebound, a new study says.

Last year's performance brings the 10-year average return, net of fees, to 4.2 percent, say preliminary data from a survey by the National Association College and University Business Officers and Commonfund.

For the year ended June 30, colleges and universities invested 51 percent of their portfolios in alternative investments, 19 percent in domestic equities, 13 percent in fixed income and 12 percent in international equities, with the remainder held in cash or other short-term securities.

"We do not minimize the pain that most educational institutions have suffered in the global financial crisis and economic downturn," John D. Walda, president and CEO of NACUBO, says in a statement. "However, we are encouraged by the markets' rebound beginning in early March 2009."

Early indications are that the average endowment-spending rate held steady at about 4.3 percent, but the median debt level appears to have increased to $43.3 million in fiscal 2009 from $28.3 million in 2008.

Preliminary findings are based on responses from 504 colleges and universities. Final results will be available Jan. 27.

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