2010 endowment results show a healthy 13.8% gain
Returns outpace those of many peer institutionsThe Brandeis University endowment produced a 13.8 percent return for the fiscal year ending June 30, a dramatic turnaround from the previous year when the financial crisis led to a 17 percent decline.
Senior Vice President for Finance and Chief Financial Officer Frances Drolette said the endowment value at the end of the fiscal year was approximately $620 million, up almost $62 million from the previous year, or roughly 11 percent.
The Brandeis FY 2010 endowment returns outpaced many of the university’s peer institutions. The Cambridge Associates Endowment Universe, consisting of more than 400 institutions, reported a median fiscal year 2010 endowment return of 12.4 percent. Brandeis is ranked in the 22nd percentile in that survey.
“This has been a challenging period for all endowments, but in the past year the Brandeis investment team aggressively worked to manage our portfolio to maintain prudent risk and sufficient liquidity. We are pleased with the results,” said Senior Vice President for Communications Andrew Gully. “The endowment return provides support for our academic mission and relieves some of the financial pressures that all institutions continue to experience.”
The performance was driven by a few key factors. Brandeis' position in fixed-income investments was conservative, and thus less exposed in the stock market and its greater volatility, Gully said. The portfolio managers hired by Brandeis also outperformed their benchmarks, leading to greater returns, he added.
The endowment will benefit from diligent management of the university’s operating budget in the last year, combined with strong fundraising, Drolette said. The university announced in August that it exceeded its fiscal year 2010 target for current budget gifts of $8 million by $2.4 million. Cost-savings contributed $1.2 million.
“The positive bottom line in the annual operating budget presented the university with an opportunity to reduce endowment spending from $39.3 million to $35.7 million,” Drolette said. “That produced a reduction in the endowment spending rate from 6 percent to 5.5 percent while still achieving a balanced annual operating budget.”
“The reduced spending from the endowment, coupled with a greater than expected endowment return of 13.8 percent, may potentially reduce planned endowment reliance in future years if all other long-range assumptions hold,” Drolette said. She cautioned, however, that “the economic climate is still volatile.”
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