Investing January 27, 2009

Higher Education Endowments Hit Hard in 2008

January 27, 2009 (PLANSPONSOR.com) - Higher education endowments fell an average 23% from July to November 2008, according to two new studies, after a 3% giveback for the fiscal year ending June 30, 2008.
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A news release about the surveys reported that the decline is nearly twice as big as any full-year return since endowment performance was first tracked in 1974, according to Brett Hammond, chief investment strategist at TIAA-CREF, which collected the figures with   the National Association of College and University Business Officers (NACUBO) and Commonfund Institute.

The survey of 796 college accounts with some $522 billion in assets as of last June, accounted for virtually all of the endowed savings of American public and private colleges, with the asset value losses erasing nearly $120 billion. However, even with the economic downturn, the 2008 NACUBO Endowment Study (NES) also showed that college and university endowments realized a 6.5% average 10-year rate of return, outperforming market indexes.

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“This year’s results remind us of the importance of taking a long-term view in assessing endowment performance,” noted John Walda, president and CEO of NACUBO, in the announcement. “Further, it is a testament to the skill of campus managers that colleges and universities have fared better than the 13.1% decline that occurred in the Standard and Poor’s 500 Index in FY08.”

NACUBO’s full 2008 study includes data from 796 colleges and universities in the United States and Canada. The follow-up survey includes 435 institutions that responded to the original study.The 2008 NES is based on information gathered as of June 30, 2008, the fiscal year-end date for most NES participants. The follow-up survey, conducted in December 2008, covered investment returns between July 1 and November 30, 2008.

More information about the Commonwealth Fund part of the research is available here .

Individual listings of college and university endowments are available here .

Average asset allocation for the higher education endowments are available here .

The cost for the full study is $89.95 for NACUBO members and $335.00 for nonmembers. The executive summary is available for $29.95 for NACUBO members and $79.00 for nonmembers. The follow-up survey is available at no charge to NACUBO members and nonmembers.

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