<p>[Endowment</a> returns 5.6 percent - The Daily Princetonian](<a href=“http://www.dailyprincetonian.com/2008/10/21/21862/]Endowment”>http://www.dailyprincetonian.com/2008/10/21/21862/)</p>
<p>The endowment return was actually a little better than I had guessed. Here are the returns of some of the larger endowments in the country:</p>
<p>8.6%-----Harvard</p>
<p>6.3%-----Brown
6.2%-----Duke, Stanford</p>
<p>5.6%-----Princeton</p>
<p>4.5%-----Yale</p>
<p>3.2%-----MIT</p>
<p>2.7%-----Cornell</p>
<p>0.5%-----Dartmouth</p>
<p>-3.9%----Penn</p>
<p>(Columbia appears not yet to have reported its returns for this year.)</p>
<p>These returns may look good compared to next years given the current volatility in the stock market and the unstable economy. Also, remember that these returns dont tell you how much the size of each schools endowment has changed. The endowment grows through investment returns and gifts to the university but shrinks by the amount that is spent that year. (Most current income such as tuition is spent the year it is received.) For example, Stanford had a 6.2% return on its investments this year but the size of its endowment is unchanged at 17.2 billion because all of that return plus the total of all 2007-2008 income (including gifts) was spent. Princeton had a smaller return at 5.6% but its endowment increased from 15.8 billion to 16.4 billion. In the case of Penn, the endowment actually shrank. In Penns case it appears that they may have had a negative return on investments combined with spending that equaled or exceeded contributions.</p>
<p>Even the reported size of university endowments is subject to interpretation. I believe all of the schools with large endowments have a majority of their capital in non-marketable investments and the value of those investments is the result of a subjective analysis. Its easy to report the size of marketable investments such as U.S. or foreign stocks but non-liquid investments in real estate, new business ventures and commodities might be much more difficult to assess. One school might give a value to certain real estate investments based on their purchase price while another might mark down those assets based on the current real estate climate.</p>
<p>Since these universities closed their books (mostly at the end of June), all of them have seen sizeable losses in their investments. There is no place to hide when virtually every asset class is declining precipitously. If Princeton is still at 16.4 billion at the end of next June it will probably be a triumph. I would guess that many if not all of the large endowments will have decreased.</p>