The College earned a return of 7.7 percent on its nearly $800 million endowment last fiscal year, which ended June 30, by investing its money in ways not typical for educational institutions.
Dartmouth's return, which translates into approximately $61 million in profits, comes at a time when many schools are struggling financially with smaller returns on their endowments.
"I'm pleased with how we've done so far. Our investment performance has been very good when compared to peers and in absolute terms," Vice President and Treasurer Lyn Hutton said regarding the $61 million profit.
The endowment represents money the College invests for the purpose of earning interest, which is used to finance expenditures while allowing the endowment to grow.
The money earned contributes to the myriad of programs funded by the endowment, including scholarships, faculty, salaries, library materials and student activity programs. Interest earned on the endowment covers about 17 percent for the College's annual spending.
A recent article from Bloomberg Business News praised Hutton and the College for its investment profits, which it attributed to Hutton's use of "non-traditional... riskier investments."
But Hutton disagrees with the analysis. "We are actually more conservative," she said.
Hutton explained that the College's Investment Office has externally invested in real estate, venture capital and international markets while avoiding derivatives, a type of investment that has seriously hurt schools like the University of Minnesota, which Bloomberg reported lost $13 million dollars through investments on a mortgage derivative that went bankrupt.
"They're not considered institutional-type investments by the public," she said. Dartmouth has invested in venture capital since the 1970s.
"We take what seems like risks... but [we] spread it around so no one piece is overweighed [so we're] taking advantage of opportunities everywhere," Director of Investments Jon King said.
King added that the office looks for long term investments so that in five to 10 years the College's assets will continue to increase. A portion of the interest earned on the endowment is returned to the fund to increase the College's assets.
King attributed a large part of the success of Dartmouth's current endowment to past investments made by Paul Paganucci, who served as the College's Vice President and Treasurer until 1985.
Dartmouth's portfolio includes companies involved with biotechnology and telecommunications as well as corporations in the Mexican and Hong Kong markets.
"We have exposure to a broad range of international equity markets," King said.
The office did major restructuring to its portfolio in 1991, thinking that the changes would better position the endowment for the 1990s. "So far we're right," Hutton said.
Seeking long term financial security and prosperity, the Investment Office investigates the market and creates strategies. Three finance professionals select small, specialized investment firms that will invest Dartmouth's money in a specific manner the office desires.
The office takes this list to Hutton, who approves it before sending it on to the Trustee Investment Committee, a subcommittee of the College Board of Trustees. This committee usually approves the strategies, which are then implemented by the Investment Office.
