Investment return on University's endowment greater than expected

Princeton University Investment Company, which is responsible for more than $6 billion of the University's endowment, earned an investment return of 35.5 percent during the last fiscal year, according to PRINCO president Andrew Golden.

This growth rate represents the highest level of return that the company has seen in 17 years, he said.

Golden said the company was pleased with this return, which is a large improvement over the previous year.

"The previous year was also incredibly strong," he said of the company's fiscal year 1999 return of 21.7 percent.

"A lot of times you use the previous year as a base level," he said, adding that the company's success is also tied into the strength of the markets. "We construct a more complicated benchmark."

Last year, the goal — 24.8 percent — was surpassed by more than 10 percentage points. "Thirty-five-point-five percent crushed our benchmark," Golden said.

The hallmark of PRINCO's investment program, Golden explained, is that the company holds highly diversified assets.

The most successful area of investment last year was private investment, including venture capital. "Last fiscal year produced more than 100 percent return [in this area]," Golden noted, crediting a very strong first three quarters of the year.

A large portion of PRINCO funds is invested in hedge funds. "This year was pretty volatile," he explained, adding that the program provided a good balance and took in a return of nearly 22 percent.

PRINCO earned sizable returns in its U.S. stock portfolio as well, gaining 24 percent on its investments, Golden said.

The remainder of PRINCO funds is invested in international stocks, real assets — a good share of which is private real estate — and fixed income bonds.

Golden said despite last year's success, the current year does not look as promising. "Over the past nine months, the global markets have been really poor," he noted.

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Normally, Golden explained, it is relatively easy to gain in the markets simply by taking risks. "So far, that hasn't been indicated," he said of the current fiscal year.

PRINCO has been doing fairly well during this fiscal year. "My colleagues and I are actually very proud," Golden said, indicating that PRINCO can probably expect another successful year despite the market downturn and slowing economy.