University investments make strong showing

Updated 10:00 AM October 25, 2004

University investments make strong showing

By Laurel Thomas Gnagey

The University's investments rose to $6.1 billion in the fiscal year that ended June 30, up from $5.4 billion the previous year, fueled by a significant increase in the endowment, Regent David Brandon told the Board of Regents Oct. 21.

Brandon—chair of the Finance, Audit and Investment Committee of the board—highlighted the annual Report of Investments that showed the endowment grew from $3.5 to $4.2 billion in one year, benefiting from a 20.7 percent return.

"This report provides ongoing evidence that our long-term diversified approach continues to allow us to generate superior long-term returns by adding value in strong markets and limiting losses during challenging markets," said Timothy Slottow, executive vice president and chief financial officer.

The endowment is the largest element of the University's investment program. Valued at $4.2 billion, it is the 12th largest in the country and the 4th largest among public universities.

The endowment comprises a diversified set of equity-oriented investments, including common stocks, absolute return strategies, real estate, venture capital, private equity and energy assets.

The endowment's investment mix has grown more complex over time as markets have become more specialized, and the University's larger pool of capital has permitted greater diversification and the implementation of more sophisticated strategies. "These trends are expected to continue," Slottow said.

Erik Lundberg, chief investment officer, said last year's performance was supported by broad investment gains made across the portfolio as most equity-oriented investments responded favorably to stronger global economic growth. Energy investments made the highest returns, as fund managers took advantage of the strong demand for energy-related assets in the face of high prices for oil and natural gas.

"Erik and his team have done a remarkable job," Brandon said. "This is truly an outstanding performance for this group."

Lundberg said the University's strong performance this year is a welcome respite from the lower returns of recent years, but he cautioned that the slight economic recovery that allowed for a better showing may not be permanent.

University investments make strong showing

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