The College endowment earned an investment return of 19.2 percent for the 2014 fiscal year, its highest growth since the recession. As of June 30, the endowment amounted to $4.5 billion, reflecting a growth of $735 million since the last fiscal year.
The endowment funds more than 20 percent of the College’s operating budget.
Chief investment officer Pamela Peedin, in a Monday press release, attributed the endowment’s performance largely to the College’s investment managers. She was not available for further comment.
The investment return marks the second consecutive fiscal year of double-digit growth, following a 12.1-percent rise in 2013. The return was 5.8 percent in 2012 and 18.4 percent in 2011.
In measuring the 19.2 percent investment return for fiscal year 2014, the College excluded a one-time unrealized gain of $60 million from June 30, 2013. Including it brings the growth to 21 percent.
The College endowment generated an average annualized return of 11.7 percent for the 20 years, according to the Monday release.
While the endowment suffered the consequences of the recession, with a 2009 loss of $835 million, its recovery has seen it surpass former levels.
This year’s endowment growth exceeded the portfolio’s benchmark of 15.3 percent and reflected a net investment gain of $778 million. Ken Redd, director of research and policy analysis for the National Association of College and University Business Officers, said that although there are multiple methods to measure return, investors’ ultimate goal is to establish and surpass the benchmark.
Economics professor Bruce Sacerdote called the return a “huge win.”
“This number is significantly above the comparison group and significantly above the long-run average that is built into the models,” he said in an email.
This year’s returns ranked in the top quartile of endowments and foundations, as measured by the Wilshire Trust Universe Comparison Service, according to the release.
“The Investment Office and Investment Committee has taken a very long-term view and chosen investment allocations to private assets and alternative assets which should yield returns that beat a straight mix of stocks and bonds,” Sacerdote said.
The Board is responsible for all investment matters, though a student and faculty committee on investor responsibility may make recommendations in decisions pertaining to social issues.
Starting this fiscal year, the College is giving private and alternative investment managers more time to report their valuations. This decision will increase the accuracy of the estimated values it reports at the end of the fiscal year, Sacerdote said.
Redd said that endowments have done well this fiscal year in general, with increases of around 10 to 15 percent, occasionally topping 20-percent growth.
Sacerdote said this has been a particularly good year because hedge funds are performing better and equity market returns were good in June and July.
In fiscal year 2013, the College posted the 22nd-largest endowment of nationwide colleges and universities and the second-smallest Ivy League endowment.
Harvard University is expecting to post a 15-percent return on its endowment, according to the New York Times. On Friday, the Massachusetts Institute of Technology reported a 19.2-percent return.
Michael Qian contributed reporting.
Correction appended: September 17, 2014
The initial version of this article misrepresented an unreported $60 million gain from June 30, 2013. It reflected unrealized gains from valuations of investments received after the fiscal year accounting deadline.
