July 12, 2011

Endowment Finishes Fiscal Year with 17 Percent Growth

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Cornell’s endowment continued to rebound from the 2008 financial crisis during the the 2010-2011 fiscal year, growing more than 17 percent to $5.27 billion. The fiscal year ended June 30.

This is the second year of strong growth since the endowment plummeted 26 percent during the 2008 financial crisis. The University says that the endowment is once again approaching its high-water mark of $5.8 billion, which it reached before the crisis.Interim CIO A.J. Edwards credits the growth to a well-diversified portfolio and good manager selection. Cornell’s investment office does not manage the endowment directly — it selects managers for the assets instead.

The current asset allocation of the endowment includes equity in the U.S. and abroad, private equity, hedge funds, natural resource-related investments, real estate and a small component of traditional fixed income and cash, according to a press release.

The endowment showed strong growth in the first three quarters, growing 6.1 percent in the first, 7.3 percent in the second, and 2.9 percent in the third. The growth was slightly reversed in the fourth quarter, as the endowment declined by .2 percent from $5.28 billion in April.

“Most markets around the world were down in May and June, offsetting strong returns in April,” Edwards said via email.

The figures on the fiscal year are preliminary, and final numbers will be available in September, according to Edwards.

Edwards said that the decline in the fourth quarter was not related to the abrupt departure of two top investment office staff. Michael Abbott stepped down from the position of CIO on May 1, after Cornell said that it had “become apparent that his style of conducting business is inconsistent with Cornell’s policies and expectations.” John Regan, senior investment officer, left on June 30 to start his own asset management firm.

“My focus and the staff’s focus continues to be on finding best-in-class managers for the [endowment],” Edwards said. “There has been no impact on the day-to-day activities in the office, and there was no impact on performance as a result of Michael Abbott and John Regan leaving.”

Original Author: Juan Forrer