Archive for Thursday, February 7, 2013

KU Endowment’s investment returns below national average for fiscal 2012, mainly because of global market

February 7, 2013


KU Endowment, year by year

KU Endowment investment returns vs. North American average:

2012 fiscal year: -3.4 percent. Average: -0.3 percent.

2011: 22.8 percent. Average: 19.2 percent.

2010: 13.8 percent. Average: 11.9 percent.

2009: -22 percent. Average: -18.7 percent.

2008: -2.6 percent. Average: -3 percent.

Market value of KU Endowment's endowed funds, with North American rank:

June 2012: $1.18 billion, No. 59

2011: $1.25 billion, No. 57

2010: $1.05 billion, No. 57

2009: $955 million, No. 60

2008: $1.22 billion, No. 62

Sources: KU Endowment Association, annual surveys by National Association of College and University Business Officers

Heard on the Hill

Read more about national college and university endowment trends on the Heard on the Hill blog.

The Kansas University Endowment Association wasn't alone when its investment returns fell during the last fiscal year. But its year was worse than average for North American colleges and universities, a survey showed last week.

An annual report from the National Association of College and University Business Officers released last week showed that endowments' investment returns fell largely flat during the 2012 fiscal year, which ran from July 2011 to June 2012. Endowments returned an average of negative 0.3 percent on their investments.

But the value of KU Endowment's long-term investments, as announced last October, fell by 3.4 percent over the same time period.

KUEA president Dale Seuferling said the lower-than-average performance could likely be chalked up to the endowment's investments in international equities.

The KU Endowment invests more in the global markets than most, he said, and the 2012 fiscal year was not a great one for such investments.

The NACUBO survey indicated that international equities were the single worst-performing investment class for endowments during that period, as the European debt crisis and China's slowing economy caused the market to tumble. Average returns on those equities were negative 11.8 percent.

"In the global markets, people know last year was tough," Seuferling said.

During a one-year span, investment returns can be a bit volatile, he said. In the two previous fiscal years, the endowment's investments outperformed the NACUBO survey's average: 22.8 percent vs. 19.2 percent in fiscal 2011, and 13.8 vs. 11.9 in 2010.

"It's always kind of a snapshot of one year," Seuferling said.

More important for an endowment's purposes is how its investments perform over many years, Seuferling said. The KUEA's aim is to provide steady support for KU for decades to come.

And in the past 25 years, it has met that goal, he said. Investment returns from 1988 through December 2012 outpaced inflation.

"Our role for the donors and the university is long-term performance," Seuferling said.

KUEA's endowed funds were valued at $1.18 billion as June 2012 ended, ranking No. 59 among North American endowments according to the NACUBO survey. Its rank 10 years before, in 2002, was the same.

But Seuferling says he values another number more: the amount of endowment support for KU each year. In that area, KUEA hit a new high in fiscal 2012, with $119.3 million in spending.

"That's the most important thing: What is the impact of private philanthropy on the institution?" Seuferling said.

The other factor in endowment value is giving, and Seuferling said KUEA plans to give an update on its "Far Above" capital campaign on the one-year anniversary of its public kick-off in April. In October it announced that campaign contributions had reached $708 million.

The campaign's fundraising goal is $1.2 billion, to be reached by June 2016.


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