QS World Ranking: 2014/2015 (Michigan at #23)

[billcsho]

<p>In general, a near 10% average annual return is a very good investment. From the article I read, I think that 9.6% is the annual investment return. Spending from it should be on a separated book. I think that is an average from the past 14 years.
Below is from the endowment FAQ:

Q. The U-M has earned more than 25 percent on its endowment some years. Why does it limit expenditures of earnings to 4.5 percent or less?
A. The FY 2007 25.6 percent return on the endowment was exceptional, as was the 44 percent return in FY 2000. The longer-term, 10-year return rate of 10.2 percent is more representative of what to expect from the endowment. It’s also important to remember that in 2001, 2002, 2009 and 2012, the rates of return were negative (-4.4 percent, -5.5 percen, -23 percent and -0.5 percent respectively) and a positive payout of about 5 percent of the market value of the endowment was nevertheless available.</p>

<p>U-M’s investment performance puts it in the upper end of the top quartile of all endowments for both the past five- and 10-year periods, as reported by Cambridge Associates, an investment consulting firm that serves colleges, universities and large institutional investors.</p>

<p>Earnings from invested funds are used for two purposes: a portion (4.5 percent of the average market value) is spent, and anything above that amount is added back to the invested principal to preserve the fund’s long-term purchasing power against inflation and market volatility. For example, an endowed professorship established in 1987 with an investment of $2 million would require an investment of $3.64 million today to be equivalent. Reinvesting a portion of the earnings helps make such growth possible, and ensures that U-M meets ongoing needs reliably and in perpetuity.

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