While the University's endowment increased by more than 10 percent in the last fiscal year, that growth rate placed last among the 10 largest college endowments in the United States.
Growth rates of the top 10 endowments spanned from Emory University's 41.8-percent increase to Princeton's 10.6 percent, according to The New York Times, which based its data on a survey by the National Association of College and University Business Officers.
The average growth rate for the 25 colleges and universities with endowments of $1 billion or more was 21.9 percent, about double Princeton's growth rate, the Times reported.
Despite its low ranking, the University maintained the fourth largest endowment in the nation, totaling almost $5 billion.
Conditions were ripe for investments last fiscal year. With a bullish stock market, the Standard and Poor's 500 Stock Index registered a 34.7 percent rise. The Consumer Price Index – a commonly cited measure of inflation – grew by only 2.3 percent.
On the surface, Princeton's relatively low growth rate appeared to signal a failure to capitalize on both the success of the stock market and a University fund-raising campaign that has been lauded over the past year as exceeding expectations.
However, Princeton University Investment Company President Andrew Golden said the low growth-rate ranking was mostly caused by a change in the "rules used to define endowment" that now exclude certain assets the University counted as part of its endowment in the past.
In addition, there are year-by-year fluctuations in investment returns. "The largest endowments are tough competition in the investment arena," Golden said. "There are many years when we're in the lead. This year we were not."
Using the former accounting methods, the endowment's growth rate last year was in the "mid-teens," Golden noted. The rate of return on investments was 18.5 percent.
Vice President for Finance and Administration Dick Spies GS '72 said he had mixed reactions upon seeing the University's ranking.
"On the one hand, these are terrific absolute results," Spies said. "On the other hand, there are always ways to do better. And that's what PRINCO's looking into right now."
Economics professor Uwe Reinhardt said one should take a cautious stance when reading the endowment data.
"If you're a trustee at Princeton and wonder whether you should get mad," Reinhardt said, "you certainly shouldn't get mad because you don't know what this means."
The endowment figures are affected by a variety of factors, including routine fund raising, special fund-raising drives and the amount of money removed for operations, Reinhardt explained. One cannot easily isolate investment returns amid these other elements of the endowment.
Allan Bufferd, the deputy treasurer of the Massachusetts Institute of Technology, also warned against jumping to generalizations based on "only part of the story."
"You're taking a snapshot out of a continuum and drawing conclusions from that," he said.