Princeton University Investment Company, which handles more than $6 billion of the University's endowment, earned an average investment rate of return of 21.7 percent during the 1999 fiscal year, according to PRINCO president Andrew Golden.
The results represented the fifth best returns of any university among a group of more than 400 schools, Golden said.
"We were very fortunate that every part of our portfolio did well," he noted. "We hit on all cylinders."
According to Golden, the strongest returns came from private investments handled by Nassau Capital, which is a for-profit investment trust that works exclusively with the University. He added that much of these gains could be credited to a receptive initial public offering market. An IPO is when a company first offers shares of its stock in a stock market.
Golden said a "big hit" for PRINCO was Portal Software, which was founded by John Little '80. Portal Software — which makes software for Internet-based services — had its IPO last spring, according to Yahoo! Finance.
Golden cited PRINCO's emerging market investments as one of the year's highlights. He added that the firm's "hedged investments protected us well during the market turmoil in the summer of 1998."
He said because of its conservative investments during that time, PRINCO was able to reinvest capital into "bargain opportunities" that resulted from the market downturn. "The [fiscal] year started off with very rough sailing which we navigated very well," Golden said.
PRINCO's investments are distributed into seven categories, Golden said. Approximately 20 percent are put into domestic stocks and 15 percent into international stocks. Golden explained, however, that the organization does not purchase securities directly. "We give money to outside investment experts to invest at their discretion," he said.
Hedge fund investments make up about 25 percent of the total investments, Golden said, adding that hedge funds tend to be more volatile than other investments. Fifteen percent of PRINCO's funds are handled by Nassau Capital for private equity investments, including venture capital.
Ten and five percent of the funds are invested in domestic and international bonds, respectively. The remaining 10 percent of the more than $6 billion PRINCO has at its disposal is invested in real assets, primarily real estate.
Though Golden said he has been pleased with the current booming market conditions, he acknowledged that the record economic growth has to come to an end. "What we've been saying for a long time is that this level of returns in this bull market is not sustainable," he said.
Golden added that PRINCO's goal is to "hold on to the gains we've enjoyed and continue to compound at some reasonable rate."
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