Princeton endowment earns 3.1 percent return, boosts 10-year average
Posted October 19, 2012; 03:00 p.m.
In the fiscal year that ended June 30, 2012, Princeton University's endowment earned a 3.1 percent investment gain, raising the 10-year annualized return to 9.9 percent. The endowment value stood at $17.0 billion, a decrease of about $100 million from the year before. The decrease in market value was primarily due to University spending from the endowment that exceeded investment gains.
The Princeton University Investment Co. (PRINCO), the University office that manages the University's endowment, certified the results at its directors meeting on Oct. 18, 2012.
The 10-year average return on the endowment places the endowment among the top percentile of 294 institutions reporting to the Trust Universe Comparison Service.
"Despite the extreme market volatility of the past decade, PRINCO’s excellent stewardship of the endowment has generated significant growth and ensured that the University can successfully pursue its key priorities. We have maintained our commitment to generous financial aid, supported superb teaching and world-class research, and attracted excellent faculty and staff," Princeton University Provost Christopher Eisgruber said.
The University increased the financial aid budget for the 2012-13 fiscal year by 5.6 percent to $116 million, continuing a trend in which Princeton's scholarship spending has outpaced fee increases for a decade. As a result, the average "net cost" for Princeton students today is lower than it was in 2001, even before adjusting for inflation. About 60 percent of undergraduates receive financial aid in the form of grants that do not have to be repaid, making it possible for them to graduate debt free, Eisgruber said.
"As a result of the endowment’s performance over the last three years, the loyalty of our alumni and friends, and the budget discipline of managers throughout the campus, Princeton has successfully rebaselined its budget in the wake of the market losses we experienced four years ago. We are pleased that we were able to achieve this result while continuing to provide our students with the generous financial aid that enables them to graduate from Princeton with little or no debt," Eisgruber said.
Eisgruber said that the University’s spend rate of 4.4 percent of the market value of the endowment in fiscal year 2012 was well within the spending policy that aims for spending between 4 percent and 5.75 percent. The spend rate for the current fiscal year is expected to rise to approximately 4.7 percent.