Endowment tops peers' even in slow economy

by Jeff Bendix

The year 2001 was good and bad news for CWRU's endowment.

The bad news was that, like virtually every other college and university, the value of the University's endowment declined along with the stock market. The good news is that the University did better than many similar institutions.

Unaudited figures for calendar year 2001 show the university's pooled endowment losing 3.3 percent of its value for the year. The value of the combined pooled endowment and outside trusts, those from which CWRU receives income but does not manage, dropped by 4 percent for the year. The benchmark against which the University measures itself—indices of domestic stocks, international stocks, bonds and real estate trusts—declined by 6.9 percent.

As of December 31, the University's total endowment stood at about $1.39 billion, down from $1.43 billion on June 30 at the end of the 2001 fiscal year and $1.49 billion at the end of 2000. The endowment consists of the pooled endowment, which accounts for about 70 percent of the total endowment; outside trusts; the unpooled endowment; deferred gifts; and the Case alumni fund.

CWRU paid out about $65 million from its endowment to support University operations, including scholarships, in fiscal year 2001.

"We are very pleased with our performance in what has been a very difficult year in the equity markets," said William Rose, CWRU treasurer. "The board of trustees' investment committee continues to pursue a sound, diversified investment strategy that is working well for us, regardless of the short-term performance of the stock market."

Rose said despite the overall decline for the year, the pooled endowment grew by 7.7 percent in the fourth quarter of 2001.

In the past few years, the investment committee has reduced the endowment's reliance on stocks of U.S.-listed companies, according to Rose. Instead, it has increased investments in stocks of foreign companies; high-yield bonds; real estate; and alternative investments, such as hedge funds and venture capital. Several of these categories held their own or grew in 2001, helping to insulate the endowment from the generally dismal performance of stock markets around the world.

Rose added that several of the University's professional fund managers—Sanford C. Bernstein & Co., National Asset Management Company and Morgan Stanley Co.—have "delivered good performance results in both up and down markets."

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