U. endowment returns 12.7 percent, up to $22.7B

The University's endowment returned 12.7 percent in the fiscal year that ended on June 30, according to Princeton University Investment Companypresident Andrew Golden. The total value of the endowment rose to $22.7 billion, up from $21 billionlast year.

PRINCO, which manages the University's endowment, is expected to certify the results in a meeting of its directors on Oct. 22.

Golden said that he was satisfied with the past year's results.

“That’s a nice number in absolute terms. It’s sufficient to meet our spending objectives and give us the ability to reinvest, and hopefully to offset future inflation,” Golden explained. “That’s the kind of result that helps us achieve the endowment’s mission, which is to support the teaching and research at this University."

This year's return was above bothHarvard and Yale's endowment returns, with Harvard returning 5.8 percent and Yale returning 11.5 percent. Golden explained that it would be difficult to draw conclusions from one year, but added that the three funds used different models.

Golden explained that broad market indicators such as the Standard & Poor’s 500 Index generally have a minimal effect on the fund's return. The S&P 500 rose 5.3 percent in the past fiscal year. He explained that PRINCO strives to build a highly diversified program that is somewhat immunized from broad market movements in most circumstances.

"So broad market movements do have an influence, but that doesn’t explain as much about performance as it might for other investors," Golden said.

The average annual return on the endowment over the past 10 years was 10.1 percent, Golden said. The 10-year return places the University among the top percentile of the 471 institutions listed by the Wilshire Trust Universe Comparison Service, according to a PRINCO press release.

Golden explained that he was also pleased with the 10-year return, noting that it spanned a period that included the 2008 global financial crisis.

"When you get something like the global financial crisis, there’s no investment strategy other than shoving the money in the mattress and buying canned goods," he explained.

According to Golden, the endowment had a lot of success in several areas, particularly in biotechnology, healthcare, venture capital and emerging markets.

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Golden noted that there was some concern over the declines in Chinese markets for the fiscal year 2016, but declined to make a prediction for the coming year, noting the constant fluctuation of markets.

Golden referred to the past fiscal year as a "groovy" kind of year, adding that it reflected efforts made in previous years.

"This was a year that was satisfying because it reflects reaping seeds sowed over many years, as well as some specific activity during the year that helped augment returns," he explained.