UNIVERSITY PARK, Pa. -- Penn State’s endowment and similar funds increased by a record $392 million in fiscal year 2011, and the total market value reached an all-time high of $1.83 billion as of June 30, 2011, according to a report to the Board of Trustees today (Sept. 9) by David E. Branigan, executive director of the University’s Office of Investment Management.
The University’s endowment pool generated a net investment return of about 23 percent during the fiscal year ending June 30, 2011, while providing $66 million in support for student aid, faculty chairs and professorships, research initiatives and other Penn State programs.
Fiscal year 2011 also was a record year for gifts to the endowment, amounting to $136.3 million -- more than the previous two years combined. Despite economic downturns in 2008 and 2009, the University’s endowment value has seen an increase of about 9.6 percent, since June 30, 2007. This growth reflects new gifts and reinvested investment returns, after providing program support of $313 million over the last five years.
The University is in the midst of the public phase of a seven-year capital campaign, For the Future: The Campaign for Penn State Students, which aims to raise $2 billion by June 30, 2014. The campaign's first priority is funding undergraduate and graduate student scholarship support.
"The endowment’s average annual net returns of 6.5 percent and 8.8 percent over the last 10 and 20 years, respectively, have allowed the endowment to maintain inflation-adjusted spending while achieving long-term intergenerational equity," Branigan said. Long-term positive returns are reflective of the endowment's portfolio diversification.
Philanthropy to Penn State in the form of endowed gifts, along with positive investment returns, account for this long-term growth. The University directs support from the endowment to purposes designated by donors.
About 59 percent of Penn State’s endowed assets are invested in public equities. The remainder is spread over a variety of fixed-income securities, real estate, private equities and other types of investments.
The Penn State Investment Council, created by the Board of Trustees in response to the University’s increasing asset base and complex investment strategies, provides direct oversight of the endowment and long-term investment program. The council regularly reviews asset allocation, new asset classes, investment strategies and manager performance.