University of Pennsylvania Endowment Posts 1.4% Investment Loss

  • School is first Ivy League to post returns for fiscal 2016
  • Gains in private equity, real estate offset declines in stocks

The University of Pennsylvania’s endowment reported an investment loss of 1.4 percent for fiscal 2016 in the worst year since 2009 for some of the best-performing college funds.

Penn is the first of the eight-member Ivy League to report returns through June 30. Positive returns from private equity, real estate and fixed-income investments partly offset negative performance from global public equities, the Philadelphia-based school said Thursday in a statement.

The fund’s value increased 6 percent to $10.7 billion, the school said. The school attributed the increase to new gifts and the transfer of endowment funds associated with Penn’s Health System, following the recent integration of Lancaster General Health.

Slow Growth

Some of the largest and previously best performing endowments couldn’t escape a low- or negative-return environment in fiscal 2016. Massachusetts Institute of Technology, with a $13.2 billion fund, gained 0.8 percent after climbing 13.2 percent in fiscal 2015 while Penn’s fund gained 7.4 percent in fiscal 2015.

About a dozen public university endowments of $1 billion or more have reported declines, including the University of Virginia and the University of California. Performance was affected by the worst month for the Standard & Poor’s 500 Index in more than three years in August 2015 amid concerns about slowing global growth.

Peter Ammon has been chief investment officer of Penn’s endowment since 2013. Over the past 10 years, the fund has produced annualized returns of 6.5 percent and an annualized 7.7 percent over five years.

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

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