Penn State Endowment Joins Large U.S. Colleges in Posting Losses

  • The $3.6 billion fund had an investment decline of 0.8%
  • School is among at least 11 public funds to report losses

More of the largest public U.S. university endowments reported investment losses for fiscal 2016, which is shaping up as the worst year for school funds since 2009.

Pennsylvania State University’s endowment lost 0.8 percent in the year through June 30, according to a report Friday by the State College-based school. It’s the smallest decline so far of at least 11 public school funds with more than $1 billion. The University of Oklahoma’s fund was down 2.3 percent, the University of Kansas dropped 1.2 percent and the University of Florida declined 3.2 percent, according to the schools’ websites.

Penn State’s annualized 7.7 percent return for the 20 years through June 30 “continues to sustain generous program support (endowment spending), thus maintaining inter-generational equity,” John Pomeroy, Penn State’s chief investment officer, said in the report.

Penn State didn’t disclose how individual strategies performed. The largest asset allocation of the long-term portfolio, at 47 percent, is in U.S. and international public equities. The allocation declined from 53 percent a year prior. The school also increased its allocation to fixed income and cash at 20 percent, up from 14 percent.

Other strategies remained constant, including 22 percent in private equity and venture capital; 7 percent in hedged strategies and 3 percent in real assets. The value of the Penn State’s long-term fund fell to $3.62 billion from $3.63 billion in fiscal 2015, when the endowment earned 3.1 percent, according to the school.

Earlier reported losses have ranged from 3.4 percent each at the University of California and Ohio State University to 1.5 percent at the University of Virginia.

In 2009, the richest schools had a median loss of 21.8 percent, according to the Wilshire Trust Universe Comparison Service. Funds with more than $500 million lost a median 0.73 percent in fiscal 2016, according to Wilshire. The Wilshire data, from fund custodians, excludes fees while most schools report returns net of fees.

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