Princeton's endowment posted a substantial gain last fiscal year as its managers beat the stock market.
"The fiscal year return will be in the neighborhood of eight percent," said Andrew Golden, director of the Princeton Investment Company. Final figures for the year are not yet available.
Overall, the endowment rose about $400 million and finished the year at about $8.7 billion, he said.
During the first part of the fiscal year, the stock market experienced a "historic decline," and the endowment was off several percentage points, Golden said.
A rally in the market during the second half of the fiscal year bolstered the endowment.
"The important thing to know is that on a relative basis we've been doing well all year long," Golden said, noting that even when the returns were negative, the University's managers were still outperforming the market as a whole.
Last year the endowment earned a 2.2-percent return but declined slightly overall because of an unforeseen rise in the number of undergraduates enrolled in the University's no-loan financial aid program.
In recent years, the endowment has been able to ride out the volatility of financial markets because of diversified assets.
"Our bond portfolio provided good insurance during the volatile times," Golden said.
The University's investments in developing markets and certain hedge funds also performed well, he said.
Golden said a Yale Daily News article stating that Princeton's endowment decreased by about five percent was misleading because it cited data from the middle of the fiscal year and did not factor in University expenses.
University Vice President and Secretary Tom Wright '62 said the solid performance of the endowment permits "steady management of the institution."
Wright said the University generally spends about five percent of the endowment, regardless of year-to-year fluctuations. The annual University budgets are not determined as a percentage of the endowment, he said.
Budgets are instead determined by the longterm performance of the endowment, he said.
Wright praised Golden's consistent leadership at PRINCO, the company that manages the endowment.
"That's the real test of excellence is when you can produce extraordinary results in very, very different investment environments," he said.
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