In the fiscal year that ended on June 30, 2011, Princeton University reported a 21.9 percent annual return on its investments, valued at $17.1 billion. The growth was in the top percentile of over 400 institutions reporting to the Trust Universe Comparison Service. These numbers demonstrate healthy finances for the University: A steady growth of endowment investments allows the University to fund study abroad programs, research opportunities and large initiatives such as the no-loan financial aid program. However, we release relatively little information about how we invest our endowment. In fact, a recent College Sustainability Report Card survey grades Princeton’s endowment transparency a D — one of the worst in the country. While information on endowment holdings is made available to trustees and senior administrators, we provide no information to the broader school community or the general public unlike the majority of our peer institutions.
The University’s endowment is operated by the Princeton University Investment Company (PRINCO), an award-winning professional investment management organization that has consistently achieved large growth values. As a company focused on excellence in long-term risk management and unyielding support for the University’s funds, PRINCO should disclose at least an overview of its overall portfolio. A lack of publicized information regarding the company’s asset allocations can cause undeserved suspicion. Of course, it is impractical to announce and publish the minute details of every stock that the endowment is invested in. Still, PRINCO and the Trustees of Princeton University should make an effort to provide some information on the investments we make. Because our endowment is so large, our choices of where to invest it can have substantial consequences, and as an institution we must ensure that those consequences are consistent with our values. If information about our investments is unavailable, though, the campus community is unable to participate in a dialogue on the wisdom of our choices. As a recipient of an overall A- in the College Sustainability Report Card — also called the Green Report Card — Princeton ought to uphold its image as a green campus that actively engages in ethical improvement.
Supporters of asset management secrecy would claim that PRINCO’s private information provides a market advantage, as peer companies would be left in the dark about the most profitable investments. However, many of the most successful investment management firms, such as Warren Buffet’s Berkshire Hathaway and Charles Schwab, provide full disclosure of their portfolios to the public. These companies remove any doubt surrounding their investments and prove the fallibility of an argument for competitive secrecy. Many of the universities scoring higher than Princeton on the sustainability report card, too, have nonetheless attained comparable returns. Additionally, PRINCO is a University-operated, University-benefitting firm which should not have market competition at the top of its agenda. Princeton University consistently earns the highest endowment per student of any college in the nation, but PRINCO and the University’s Trustees should also assure us that it is being invested securely and ethically.
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