The University endowment grew to $13 billion in the past year, Princeton University Investment Company (PRINCO) president Andrew Golden said yesterday.
Investment returns for the 2005-06 fiscal year were 19.5 percent, surpassing last year's returns of 17 percent and the University's 10-year average of 15.6 percent.
Golden described 2005-06 as "a fabulous year" for PRINCO's investments, explaining that "the return was very strong relative to our benchmarks."
Returns trailed M.I.T., whose 23 percent returns brought the endowment there to $8.4 billion, and Yale, whose endowment returns of 22.9 percent outpaced all Ivies in 2005-06. Stanford's endowment generated returns of 19.4 percent last year, while Harvard saw returns of 16.7 percent.
Harvard's endowment, now valued at $29.2 billion, remains the largest university endowment in the world, while Yale comes in at second with $18 billion. Princeton ranks fifth nationally, following Stanford and the University of Texas system, whose endowments are both around $15 billion.
The national average for university endowment returns was 9.3 percent in 2005, down from 15.1 percent in 2004, according to Cambridge Associates LLC, an endowment management firm that analyzes growth trends. Since not all universities have released their 2006 endowment numbers, statistics are not yet available for the most recent fiscal year.
Endowment growth, which accounts for University expenditures from the endowment, was 16.1 percent. It was 13.1 percent in 2004-05.
Golden said he doesn't worry about year-to-year returns, but rather focuses on long term sustainability and consistency. "One year is actually a very short term," he explained. "What matters is the big picture, over time."
PRINCO's goal is to enable the University to spend four to five percent of the endowment each year and to account for inflation while still growing the endowment. "So the return needs to be in low double digits, but that's a longterm goal."
The University's endowment has, on average, returned 15.6 percent over the last 10 years. The national median over the last decade is 9.6 percent, Golden said. "We've added $15 billion in value in the last 10 years."
Twenty years ago, the University's endowment ranked second among private universities, behind only Harvard. The endowment then was more than $200 million larger than Yale's.
But Golden stressed that "the most important thing about the endowment is being able to spend it."
Though the University's endowment is smaller in size than Harvard's and Yale's, it is the largest per student in the Ivy League and the second largest among the nation's undergraduate institutions, according to data from The Chronicle of Higher Education.
Franklin W. Olin College of Engineering, which has fewer than 300 students and an endowment of nearly $500 million, ranks first.