U sees high investment returns on endowments

Maggie Hessel-Mial

The University’s investment returns from its land grant endowment are near the top quarter of 182 colleges and universities around the country, despite seeing lower revenues last year.

“The bad news is we had a bad return,” said George Pendergast, spokesman for Cambridge Associates, a consulting firm the University hires to gain insight on investments. “The good news is this is only a one-year return.”

The semiannual returns studied from 2001 show the University investments are down almost 16 percent from last year. That number is lower than the Standard and Poor’s measurement of the market for the same time period, Pendergast told the University Board of Regents Finance and Operations Committee Thursday.

Over a 10-year period, the University has seen returns of 13.9 percent on its investments. As of June 30, the endowment was divided into 88 percent stocks and 12 percent bonds.

“This is very, very good,” Pendergast said. “The ‘U’ is right at the top quartile.”

In previous years, the University had been in the top 10 but has slipped after recent economic setbacks.

The University’s $600 million endowment comes from royalties earned from the sale of minerals, timber and land originally donated to the school.

The University invests the money and is allowed to spend 5.5 percent of the returns for scholarships and faculty chairs, said Richard Pfutzenreuter, associate vice president for the Office of Budget and Finance.

Pendergast said he and his staff are looking into adding real estate to further diversify the University’s investments, but he said he thinks little if any changes need to be made to the portfolio despite this year’s returns.

“We need to maintain longer perspective,” Pendergast said. “My recommendation is to stay where we are now. We do not want to make any dramatic changes in allocation.”

Regent Anthony Baraga echoed the sentiments of the group, arguing against major changes to current investments.

“Thirteen-point-nine percent is not bad,” Baraga said. “Why would we want to change just because of one bad year?”

Maggie Hessel-Mial welcomes comments at [email protected]