Endowment rises to $5.3B over fiscal year

The University's endowment ballooned 21.6 percent to $5.3 billion in the past fiscal year, making Penn's rate of endowment growth the highest in the Ivy League, a recent higher-education survey revealed.

University officials say this year's boost is the result of shrewd strategies in investment, fundraising and internal reallocation of funds from Penn's Health Systems to the endowment - a stockpile of funds reserved for costs like financial aid and research.

Last year, Penn's rate of increase was 8.7 percent.

Penn officials attribute about half of the endowment's growth to a 12.5 percent return on investments last year. Relocating funds from other parts of the University accounted for about 30 percent, with gifts making up the remaining 15 percent.

Overall, the University's endowment increased about $1 billion over the past fiscal year - July 1 through June 30 - Chief Investment Officer Kristin Gilbertson wrote in an e-mail.

In recent years, Penn has made efforts to diversify its investment plan by emphasizing international emerging markets and so-called alternate routes like hedge funds, Executive Vice President Craig Carnaroli said.

Diversification of investments provides more stability as the market ebbs and flows and has proved successful over the long run, he added.

This trend is consistent across many universities with endowments in excess of $1 billion, National Association of College and University Business Officers Director of Research and Policy Analysis Jessica Shedd noted.

According to Carnaroli, Penn's plan of internal reallocation is less common.

Administrators decided to move funds from Penn's now-thriving Health Systems to the endowment because it would allow their investments to earn higher returns, Carnaroli said.

Donations inspired by Penn's capital campaign, now in its private stage and set to publicly launch in the fall, also contributed to the endowment's growth.

But despite this year's improved growth rate, the University's total endowment continues to hover at fifth place within the Ivies, trailing closest competitor Columbia University by about $300 million, according to NACUBO's annual survey of over 700 universities.

Harvard University's $29 billion endowment is by far the largest of both the Ivies and universities across the country.

Penn's endowment ranks 11th, a move up from 12th place last year.

Nationwide, universities received an average of 10.7 percent returns on their endowments, making it "another good year" for higher education, said Brett Hammond, an investment analyst for TIAA-CREF, the company that oversees the NACUBO study.

The last few years have seen strong return rates, but "it wasn't all that long ago that the average returns were negative," Shedd said, referring to a national market dip in the early part of the decade.

Pleased with this year's performance, Penn officials are optimistic about the future.

"There's a chance we'll cross $6 billion this year," Carnaroli said.

Please note All comments are eligible for publication in The Daily Pennsylvanian.