University's endowment performance ranks second nationally according to 24/7 Wall Street
February 10, 2010
Virginia Tech was recently cited by 24/7 Wall Street as having among the best managed endowments of colleges and universities for the fiscal year ending June 30, 2009.
In an article appearing on the Internet-based Fund Fire, a widely utilized site for investment information, the Virginia Tech endowment was ranked second among what were characterized as the 17 Best Managed Endowments.
Raymond Smoot, chief operating officer of the Virginia Tech Foundation which manages private funds for the benefit of the university, expressed pleasure in this recognition but cautioned that endowment investment returns are best viewed in a longer context.
“Our change in endowment market value of negative 14 percent as cited in the article ranked very well compared to the broad investment markets and most endowments in a highly volatile and challenging investment environment,” said Smoot. “However, endowment performance is best viewed in the longer term and I am pleased that for the past five years our endowment has performed in the upper 25 percent of college and university endowments nationally.”
John Cusimano, director of investments and debt management for the Virginia Tech Foundation, noted that a number of portfolio decisions made prior to the market downturn proved fortunate.
“We resisted the urge to leverage the fund during an extended period of low return expectations, we maintained a relatively small amount of illiquid assets, and we converted our fixed income allocation to all U.S. Treasury and Agency securities prior to the market correction,” he said “We also effectively managed our duration and credit risk after the markets bottomed in the spring of 2009.”
Dan Ward, the foundation’s investment manager, says he believes that the portfolio is well positioned for the future.
“Over the past two years we have been very active in upgrading many aspects of the endowment, including the quality of managers, our risk management systems and our research process,” said Ward. “These changes should allow us to effectively capitalize on future opportunities and continue our recent success.”
The analysis performed by 24/7 Wall Street used data released last week by the NACUBO (National Association of College and University Business Officers) - Commonfund 2009 Endowment Study. The study surveyed 842 educational endowments, comparing the funds' absolute and percentage returns. For the first six months of the current fiscal year beginning July 1, the Virginia Tech endowment has increased $55.2 million, or 12.2 percent.
The 24/7 Wall Street analysis gave that Harvard University and Yale University, which have the largest endowments in the country, failing grades for their performances in fiscal 2009.