Endowment investments show growth

The Princeton University Investment Company (PRINCO), which is responsible for managing the University's multi-billion dollar endowment, estimates an investment return of 16.5 percent in the last fiscal year, said PRINCO president Andrew Golden.

"Our return this year is above average from what we expect to generate year after year," Golden said. PRINCO has not closed its books for the fiscal year that ended June 30 and will publish a final report in mid-October.

After spending on the University operating budget and gifts are factored in, the value of the endowment will increase from about $8.7 billion to about $9.9 billion, pending finalization, Golden said.

"The numbers aren't final yet but we are pretty confident that our return will be slightly above that number [16.5 percent]," Golden said.

The return is a large improvement over returns from previous years: 8.2 percent in fiscal year 2003, 2.2 in 2002 and 2001.

"The increase is due largely to the fact that markets went up quite a bit and we participated," Golden added.

The most successful sectors the University invested in during fiscal year 2004 were international stocks and energy companies.

"We always run, as a matter of policy, a highly diversified portfolio," Golden said. "In the last fiscal year, we had a greater dispersion of assets and made money in lots of different categories."

Though most of PRINCO's strategy seemed to work well overall, Golden cited fixed income investments as a weak area.

But the decline in fixed income investments reflects "broad-based market moves more than anything distinctive about our program," Golden said.

In addition to PRINCO, the Nassau Capital corporation controls a small portion of the University's investments but no longer makes new investments with University capital.

"I believe that Mr. Golden and his staff have done a terrific job over the last several years over a very difficult economic climate," said senior managing director of Nassau Capital and former PRINCO president Randall Hack '69.

Get the best of the ‘Prince’ delivered straight to your inbox. Subscribe now »

Golden played down how much one year's investment return would affect short-term budget spending.

"We have a longterm investment program and the endowment's mission is one that gets prosecuted over centuries," Golden said. "In many ways, a year is a fairly short term to focus on."

Last year, the University had the third largest endowment among private universities after Harvard and Yale.

In fiscal year 2003, Harvard experienced a 12.5 percent growth on its endowment worth $19.3 billion at the time, according to a study released in January by the National Association of College and University Business Officers.

Yale had an investments return of 8.8 percent on its endowment worth almost $11 billion in fiscal year 2003, the study said.

"In the last fiscal year, I don't think there will be very much change in our rankings," Golden projected. "The important thing to focus on is that our long term returns are very strong compared to any peer university."