The University reported that the endowment earned a 0.8 percent investment gain for the 2016 fiscal year, with the endowment standing at $22.2 billion. This is a decrease of about $570 million, or 2.6 percent, from its value at the end of FY 2015.
The decline in the overall value of the endowment is due to withdrawals to cover operating budget costs, according to Provost David Lee GS '99.
On average, the endowment receives a 8.2 percent return annually, putting the University in the top percentile of its peer institutions, according to the Wilshire Trust Universe Comparison Service.
The Princeton University Investment Co., which manages the endowment, will meet later this month to confirm the investment results.
The secret to PRINCO’s success includes diversification, investing in a fund of funds, “knowing how to find great partners,” and “knowing how to work with them,” said Andrew Golden, the president of PRINCO. PRINCO currently has a network of 75 managers globally.
Although the investment gain was below 1 percent, Golden noted that the endowment outperformed many funds in the equity market, citing the All Country World Index , which was down 3.7 percent this year.
“The factors that enable us to outperform should be in place,” he said, “but we’ll have to see what the baseline opportunities are," he said.
Golden added that he is optimistic about the endowment’s long term growth.
“The endowment allows the University to sustain the excellence of its research and teaching programs as well as to maintain its commitment to its generous financial aid and full access for any student who is admitted, regardless of ability to pay and without the need for students to take out loans," Lee said in a University release.
The endowment is used to budget about half of the University, according to Golden, who said he feels proud and compelled to be able to make the University affordable through financial aid.
“Even students who are not on financial aid are getting a price-subsidized product,” he added. “The endowment enables us to spend about twice as much on every student as what they pay in tuition.”
Earlier this year, the University's Board of Trustees approved a $147.4 million increase in the operating budget to cover increased undergraduate financial aid.
Dartmouth, University of Pennsylvania, and Harvard all reported investment losses this year. Harvard, which has the largest endowment, posted a two percent annual investment loss, which, in addition to spending, cost the university $1.9 billion. The only other Ivy League school to report a positive investment return this year is Yale, which saw a gain of 3.4 percent.
When asked to comment on the other Ivy League schools’ endowment growth, Golden admitted he is “pulling for them.”
As citizens, he added, “we want there to be a robust higher education system.”