Endowment balloons to $6.6 billion

The University's investment strategies have paid off with an unprecedented boom in endowment growth over the last fiscal year.

Penn announced an impressive 20.2 percent return on its endowment investments for the fiscal year that ended on June 30, officials announced yesterday at a Board of Trustees meeting.

The endowment now totals $6.6 billion, having grown by $1.3 billion over the past year.

Investment gains accounted for $990 million of the increase.

These returns are the highest that Penn has experienced in the past ten years.

Most endowment funds are invested, and a

portion of the returns are used for University initiatives like financial aid and donor-sponsored programs.

The growth represents a significant improvement over last year's 12.5 percent returns, exceeding the expectations of University officials.

"It's always tough to predict the endowment growth because of the markets, but we're very pleased with the results," Executive Vice President Craig Carnaroli said. "It's very competitive with our peers."

He added that Penn has been "in a very strong market climate and . had really strong performance across all [its] asset classes."

The year's high returns can be attributed to a number of strategical asset allocation decisions made by the Investment Office.

"Last year was a great year for the equity market," Chief Investment Officer Kristin Gilbertson said. "We also benefited because a couple years ago, . we had moved to increase our weighting in international equities and emerging market equities, . [which have] continued to outperform."

There were also strong returns in the University's alternative investments in hedge funds, private equities, real estate and natural resources.

Each of these asset classes earned at least 19 percent returns, with emerging market equities showing a particularly stellar performance at 42.2 percent, Gilbertson said.

"This year, everything did well," she said. "Returns were strong across the board."

Carnaroli attributed the recent success of the endowment to diversification of the portfolio, allowing the University exposure to all major market segments.

And while Penn still trails behind some peer institutions like Harvard University, which reported 23 percent returns, Carnaroli is still very excited about this year's numbers.

"We are just three points behind [Harvard]," he said. "When [Gilbertson] started here, we were closer to nine points behind Harvard."

He added that Penn is "seeing [its] performance converge closer to [its] peer returns - I think it's a good sign."

And Penn investors are always looking toward the future and thinking of new ways to catch up.

"We continue to be opportunistic in our look for managers and to identify firms and ideas and individuals that we think can add substantially," Carnaroli said.

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