Dartmouth's endowment saw an 18 percent investment return over the past fiscal year -- the second-highest return in the Ivy League among those universities reporting to date.
The College has yet to officially announce the endowment's gains, as independent auditors are still confirming Dartmouth's internal analysis of the fund's performance. But Associate Vice President for Investments Jonathon King told the Dartmouth that the College enjoyed a strong return.
"We basically have our final numbers, and it was a pretty good year -- a very good year, in fact," King said.
The net return for the endowment, which King rounded to 18.6 percent, brings the total market value of the endowment to $2.45 billion as of June 30.
The jump is a vast improvement from last year's 2 percent increase, and the 5.7 percent loss in the fiscal year 2002.
Columbia and Yale universities are the only Ivy League school that have yet to release their final numbers. Brown, Cornell, Harvard, Princeton and the University of Pennsylvania all earned at least a 16.1 percent return on their endowments for the last fiscal year.
Harvard performed best among the League, yielding a return of 21.1 percent. That brought the market value of the fund to $22.6 billion, making it the nation's largest college endowment.
Cambridge Associates, an internationally-based firm that provides research and consulting to three-quarters of U.S. colleges and universities, has calculated a 16.9 percent median investment return this year in a 129-school analysis.
King was reluctant to confirm Dartmouth's endowment ranking among the Ivies without reporting from Columbia and Yale.
"I'm not ready to say what rank we are, though I'm pretty sure we are within the top three in the Ivy League," King said.
The impressive performance of the endowment is good news for the College, which has suffered in recent years from institutional budget cuts and poor endowment performance in the wake of a troubling financial market that affected universities nationwide beginning in 2000.
In 2001, university endowments went negative, losing money at a median rate of 3.7 percent.
The 2002 fiscal year was no easier on the institutions, as endowments continued to lose at an average rate of 6.4 percent.
Not every institution was been hit so hard. Harvard, which has the largest endowment in the nation, saw a 9.8 percent increase in the size of its endowment, gaining over $1 billion in the 2003 fiscal year.
The second and third largest endowments in the country, Princeton and Yale, each gained a respectable 4.9 percent over the same 12-month period.
This time around, College Provost Barry Scherr welcomed the news of the Dartmouth endowment's recent growth.
"Having the endowment perform that well in the last fiscal year should do a lot to bring us back to a stable operating budget," Scherr said. "For that, we're extremely pleased."
Scherr said that the endowment's increase will have a small impact on this year's operating budget, but will favor the upcoming 2005-2006 budget.
Annually, the College infuses roughly 5 percent of the endowment's market value into its operating budget. King said he "wants that to compound at a growth rate of 8 to 9 percent."
Though 2003-04 endowment returns are just now being released, the current fiscal year has already been underway for a quarter. Some financial analysts speculate that the extraordinary endowment returns seen throughout the nation last year are unlikely to repeat.
King is wary of making any early predictions, though he said he, too, thought that a repeat of this year's "fabulous" performance was unlikely, and that he'd be "happy" to see returns next year between 8 and 9 percent.
"Trying to project forward returns is a very difficult thing to do," King said. "There are so many variables at stake -- the [upcoming presidential] election, the war in Iraq, oil prices, possible terrorist attacks. And there are even indications that the economy is slowing down. It's just too far off."
Like other university endowments, Dartmouth invests the majority of its assets in equity. The College has specific targets it aims to maintain every fiscal year, with slight variation from year to year.
Those targets include 26 percent in domestic equity, 13 percent in international equity and 21 percent investment in what are commonly known as "hedge funds," though King prefers to call them "alternative equity strategies." Another 13 percent of the endowment is composed of private equity, venture capital and buyout funds.
The remaining 27 percent of the endowment is divided 15 percent into bonds and 12 percent in "real assets," which include real estate, oil and gas.
Though the endowment performed extremely well by all standards, the fund has yet to regain its peak value from four years ago, when it valued $2.49 billion and subsequently suffered through the recent recession.
"We look to the horizon, which is always five to 10 years away," King said. "Our investment strategy focuses on the long term. One-year periods within the context of investments are nominal."
