College Endowments Have Banner Year
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College Endowments Have Banner Year

Turner Construction Company

The stock market was kind to college endowments last year, delivering double-digit returns for the 2013 fiscal year, according to a new study by the National Association of College and University Business Officers and the Commonfund Institute.

The more than 800 colleges and universities who participated in the study saw returns of 11.7 percent (excluding fees), representing a healthy rebound after a -0.3 percent return in fiscal year 2012.

“The strong overall performance by endowments is encouraging at a time when the global economy continues its relatively slow recovery from the economic crisis five years ago,” Commonfund Institute Executive Director John S. Griswold said in a statement. “This year’s investment results reflect in large measure the strength in publicly traded equities that has prevailed since early 2009.”

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Institutions devoted more than half of their portfolios to alternative investment strategies, such as private equity, distressed debt, hedge funds, and venture capital. Still, the biggest driver for last year’s growth were domestic equities, which had average returns of 20.6 percent, followed by international stocks at 14.6 percent. Alternative investments boasted an 8.3 percent return.

Participating schools said that 8.8 percent of their operating budgets are funded by their endowments, ranging from a high of 16.2 percent for institutions with assets worth more than $1 billion to 2.5 percent for schools with less than $25 million in assets. Many institutions also use their endowment to fund financial aid and other programs.

Just over half of endowments said they had seen an increase in charitable gifts, while 30 percent witnessed a decline in donations.

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