Amid global recession, University endowment grows

The University’s endowment rose 13 percent over the last fiscal year to stand at $1.14 billion as of June 30, Executive Vice President and Treasurer Lou Katz said.

The endowment gained $135 million during fiscal year 2010, which began July 1, 2009 and ended June 30, 2010, an improvement after its 18 percent drop last fiscal year.

Don Lindsey, the University’s chief financial officer, called the 2010 fiscal year a “mirror image” of the 2009 fiscal year for GW, in the sense that all assets were up instead of down.

“Everything had double digit returns,” Lindsey said.

Last fiscal year, GW’s endowment lost nearly $250 million, but even then fared better than other institutions. The average loss for university endowments in 2008 was 23 percent, according to a report released by the National Association of College and University Business Officers.

Lindsey said the most difficult quarter of the 2010 fiscal year was the fourth quarter, which ran from the beginning of April through the end of June, a time period which coincided with the economic crisis plaguing Greece and other European countries.

“The market was down 12 percent, [but] we held up very well,” Lindsey said. “We were only down about 1 percent for the quarter.”

Lindsey said the University is positioned conservatively, given the volatility of the markets, which he called the “biggest risk” to the endowment fund. “[The market] could be up several percent one month and down several percent another,” Lindsey said.

In terms of the University’s stock exposure, about half of it is inside the U.S. and half is out, Lindsey said.

“We are looking to expand regions,” said Lindsey, adding that those regions include Latin America and Asia, particularly China. “You have to look all around the world. You can’t just have the majority of your assets in the U.S.”

With the global stock market becoming less expensive, it is a good time to gradually increase stock exposure outside the U.S., Lindsey said.

“Having gone through a very different year than [2008-2009], the worst is behind us,” Lindsey said, while cautioning that the financial situation is still unclear in developing countries and the rest of the world.

“It’s difficult to anticipate if we’re going into a second recession, but we can anticipate interest rates will be low and the stock market will continue to be volatile,” he said.

All told, Lindsey said he is looking forward to another successful year with the endowment.

“I think this is an excellent time because there are so many opportunities out there that will supply excellent returns throughout the year,” Lindsey said. “I think we’ll end up doing well.”

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