Princeton Posts 0.8% Gain in Year Most Colleges Had Declines

  • Yale, Princeton only funds with positive returns among Ivies
  • Endowment earnings will help fund planned campus expansion

Princeton University’s endowment earned an investment return of 0.8 percent in a year when many schools posted losses as they grappled with a volatile market.

The fund’s value decreased about 2 percent to $22.2 billion as of June 30, the New Jersey-based school said in a statement Friday. Princeton and Yale University were the only colleges among the eight Ivy League schools with a positive return. The group’s weighted average performance was a decline of 0.2 percent, according to data compiled by Bloomberg.

“We are grateful to PRINCO for achieving a positive return in a difficult year,” David Lee, Princeton’s provost, said in the statement, referring to the Princeton University Investment Co., which manages the fund. “Even with the positive return, the overall value of the endowment declined because of the annual distributions we make to support the operating budget.”

Princeton in the statement didn’t disclose strategies the endowment used to produce a gain. The school’s largest target allocations for the year ended in June were 25 percent each to private equity and independent return, followed by real assets at 19 percent, according to a financial report. Princeton didn’t include its current allocation in the statement. Andy Golden has managed the fund since 1995.

Princeton is reliant on the endowment, with roughly half its operating expenses coming from the fund. Yale, where Golden previously worked, has the best return among schools reporting so far, with a 3.4 percent return. Princeton’s 10-year average annual return was 8.2 percent as of June 2016, slightly ahead of Yale’s at 8.1 percent, and above that of Harvard, the richest U.S. school, at 5.7 percent.

About 430 endowments lost 2.7 percent on average in fiscal 2016, according to an estimate by Cambridge Associates, which manages $9.9 billion for endowments and foundations. The Cambridge data, like the school returns, is net of fees.

At a time when some schools have decreased their annual endowment spending, Princeton’s trustees in March voted to allow a larger increase in endowment spending than in past years, about $100 million to be spent over the next few years.

One reason the school will spend more is because the undergraduate population will grow over the next decade, said Bob Durkee, vice president and secretary of the university.

Princeton, with one of the largest endowments per student, expects to enroll 500 additional undergraduates over time. Spending from the endowment will help fund construction of new buildings, such as dorms to house the students, Durkee said.

Princeton had the fourth largest U.S. endowment as of June 2015. The university in fiscal 2015 reported an investment return of 12.7 percent.

— With assistance by Kate Smith

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