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BUSINESS Friday 31 January 2020
A25

Survey: University investments saw slower growth in 2019

By COLLIN BINKLEY Still, the groups behind face a 1.4% tax on their in-
AP Education Writer the survey said schools' vestment earnings as part
BOSTON (AP) — Most U.S. shouldn't strive to match of a tax overhaul approved
universities made money the S&P 500, but should by Congress in 2017. It will
on their financial invest- focus on spreading their apply to schools that have
ments last year, but their money over a wide range at least 500 students and
returns were tempered by of investments to safeguard endowments that amount
a global economic slow- against market swings. to at least $500,000 per stu-
down fueled by America's "There are going to be dent.
trade war with China, times when the markets are Liz Clark, vice president of
according to an annual gangbusters and look really policy and research for the
survey of school finance good, while these portfolios business officers associa-
chiefs. will not have returns that tion, said her organization
The survey, released Thurs- meet that," Kevin O'Leary, will have a clearer picture
day, found that college CEO at TIAA Endowment of the tax's impact next
and university endow- and Philanthropic Services, year.q
ments returned an aver- said in a call with reporters.
age of 5.3% in fiscal year "It's a balance to create
2019, down from the pre- In this March 7, 2017 file photo, rowers paddle down the Charles consistent returns to match
vious year's returns of 8.2% River past the campus of Harvard University in Cambridge, Mass. what we need to spend."
and 12.2% the year before Associated Press Most universities in the sur-
that. The returns in 2019 vey reported that they
were among the weakest saw some of the strongest But schools with $25 million increased spending from
in the past decade, but it's returns, the survey found. or less, the lowest category their endowments in 2019,
still seen as a long-term re- Schools that invested larg- in the survey, performed with an average withdraw-
bound over losses suffered er shares in U.S. stocks also nearly as well as the richest al of $30 million to sup-
following the 2008 financial fared well amid a block- schools in 2019. Their suc- port their annual budgets.
crisis. buster year for the nation's cess was credited to their Overall, about half of their
Harvard University re- stock market, while those reliance on the U.S. stock spending went to student
mained the wealthiest with heavier investments in market, which had its best financial aid, while the rest
school in the U.S., the sur- international stocks drew returns in six years. The Stan- was split among academic
vey found, with an endow- more modest returns. The dard & Poor 500 index, one programs, faculty jobs and
ment valued at nearly $40 groups behind the survey broad measurement of other costs.
billion. The University of attributed the slump to the the U.S. stock market, rose Some of the nation's
Texas system and Yale Uni- U.S.-China trade war, say- 10.4% in fiscal year 2019. wealthiest schools will soon
versity followed with about ing it has slowed global
$30 billion each, while trade.
Princeton University and Colleges tend to have dif-
the Massachusetts Institute ferent investing strategies
of Technology each had based on their wealth, the
more than $26 billion. survey found. The richest
More than 100 schools re- schools invest most heavily
ported endowments top- in a category that includes
ping $1 billion, but the vast venture capital funding,
majority of schools have hedge funds and private
far less. Out of all schools equity, while schools with
surveyed, the median en- smaller endowments typi-
dowment was valued at cally focus on U.S. stocks
$144 million, and 3 out of 4 and bonds.
had $500 million or less.
The survey is based on
data reported by nearly
800 schools across the U.S.
and Canada. It was per-
formed by the National As-
sociation of College and
University Business Officers,
a national group that rep-
resents 1,900 colleges and
universities, and by TIAA,
an investment and bank-
ing firm based in New York.
Universities with more than
$1 billion saw the greatest
returns in 2019, the survey
found, with returns aver-
aging just under 6%. They
fared better in large part
because they have the
money to invest in areas
such as venture capital
and private equity, which