Princeton endowment returns 3.1 percent, significant drop from recent years

The University’s endowment returned 3.1 percent in the most recent fiscal year, a much smaller return than the growth the endowment saw in years past. While the endowment did grow, the total value decreased by $100 million from $17.1 billion to $17 billion.

This year’s return is down from the 21.9 percent growth in fiscal year 2011 and the 14.7 percent growth in fiscal year 2010. The University released its endowment figures this afternoon following a Thursday directors meeting at the Princeton University Investment Company, which manages the endowment. Princeton was one of the last Ivy League schools to release its year-to-year growth in the endowment.

“Despite the extreme market volatility of the past decade, PRINCO’s excellent stewardship of the endowment has generated significant growth and ensured that the University can successfully pursue its key priorities,” University Provost Christopher Eisgruber ’83 said ina statement.

Eisgruber also said the University would increase its financial aid budget for the coming fiscal year to $116 million, a 5.6 percent increase.

Princeton’s return is comparable to numbers released by other Ivies over the past few weeks. Yale noted a return of 4.7 percent, while Harvard posted a loss of 0.05 percent in fiscal 2012. Dartmouth, with a positive return of 5.8 percent, outpaced all other Ivies. Cornell is the only Ivy yet to release its results.

“In many ways, it’s actually a very solid performance, given the environment,” PRINCO President Andrew Golden said of the endowment return in an interview Friday afternoon. “But I consider it an important part of my job to make sure we keep focus on the right horizon, on long-term performance.”

The University’s 10-year annualized return increased to 9.9 percent, a figure which places Princeton in the first percentile of the 294 institutions which report their endowment figures to the Trust Universe Comparison Service, the University said.

Ivy League endowment returns for fiscal 2012 were substantially smaller than those of previous years, which may be due in part to poor performance in foreign markets. Developed foreign markets contracted in value by 13.8 percent, while emerging foreign markets shrunk by 15.9 percent.

Golden said PRINCO has no plans to shift its long-term investment strategy.

“We have to look at our unique situation and objective as an investor, and we don’t anticipate any major global changes which would cause us to change our course,” Golden said.

The decrease in total endowment value to $17 billion was attributed to University spending, which exceeded the gain in investments. In fiscal 2012, the University spent 4.4 percent of its endowment, which falls between 4 and 5.75 percent, the range targeted by the policy on spending the University has followed in recent years.

Correction: Due to an editing error, a previous version of this article incorrectly identified the status of the endowment. The endowment returned 3.1 percent. The 'Prince' regrets the error.