University of Virginia Endowment Declines 21% as Markets Fall

By Oliver Staley

Sept. 1 (Bloomberg) -- The University of Virginia’s endowment fell 21 percent to $3.96 billion in the fiscal year ended June 30, hurt by declines in stocks, private equity and real estate.

The loss was caused by the greatest period of “wealth destruction” since the Great Depression, Chris Brightman, chief executive officer for the Charlottesville-based University of Virginia Investment Management Co., said in a report posted last week on the school’s Web site. The endowment reflects a $1.1 billion investment loss, as well as $211 million spent by the university and $181 million in contributions.

Virginia’s loss was smaller in percentage terms than the 30 percent investment decline estimated by Harvard University, in Cambridge, Massachusetts, which manages the largest fund in education. The loss was greater than the 19.6 percent decline in benchmark indexes the University of Virginia uses to track its performance because it chose to hold cash instead of investing in equities that recovered in value, according to the report.

“In reaction to the global liquidity crisis in September and October, we lowered our risk profile and raised cash,” the management company said in the report. “Because of our uncalled commitments to private funds, we chose not to use this cash to rebalance into public equities as markets recovered this spring. Our performance for the year suffered as a result.”

Equity, including private equity as well as stocks, made up 58 percent of the endowment after falling 26 percent for the year. Real estate, 10 percent of the endowment, fell 35 percent. Fixed income, cash and so-called absolute-return investments, made up 32 percent of the fund and rose 6.4 percent.

The University of Virginia’s endowment was the 20th-largest among U.S. schools as June 30, 2008, according to the National Association of College and University Business Officers.

To contact the reporter on this story: Oliver Staley in New York at ostaley@bloomberg.net

Last Updated: September 1, 2009 16:00 EDT

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