'Sound' investments for university yield highest returns in past 10 years
The UA Foundation saw the highest investment return for University of Arizona funds in a decade last year, while the national average of peer institutions dropped about 2 percent.
In a 1998 comparison of 506 universities nationwide, the University of Arizona ranked 149 because of "conservative" investments, said Gary Scrivner, vice president of finance and administration at the UA Foundation.
"In most cases we out-performed our peer institutions because of sound investments," he said. "We invest for growth and income."
While some universities employ non-traditional investments - including public real estate and oil and gas partnerships - the UA's "sound" investments, such as U.S. and foreign stocks, offered a 20.5 percent return last year.
"That's extremely good," Scrivner said. "(We have) a very conservative investment policy. Funds that have been in non-traditional investments have been hurt (so) we've avoided those."
The UA holds $221,779,000 in endowment assets, placing the university in the top 30 percent of schools surveyed, according to the National Association of College and University Business Officers. Arizona State University ranked 194 in the national survey, with $153,995,000,
ASU invested in many of the same markets as the UA, said Jerry Snyder, controller and treasurer at ASU, attributing the difference in rankings to the schools' age.
"The UA has been a university much longer than ASU," he said, adding that ASU was officially established in 1958. The UA was founded in 1885.
While ASU invests 8 percent more in U.S. and foreign stocks than the UA, both have the same return rate of about 20 percent, Snyder said.
"Both schools are doing pretty well," he said.
Harvard University took the top spot with about $13 billion in endowment assets, with the University of Wisconsin-Whitewater ranked last at $5 million.
The UA Foundation, a non-profit fundraising entity for the UA, invested 50 percent in U.S. stocks, compared to the national average of 52 percent, Scrivner said.
The foundation, which uses three investment firms to manage its endowment funds, also invested 12 percent in foreign stocks, 35 percent in U.S. bonds and 3 percent in domestic cash and cash equivalents.
"We have avoided non-traditional investments which are riskier of course," Scrivner said.
The foundation has maintained a 5.5 percent payout rate to various university programs and scholarships during the past three years, up from 5 percent in 1995.
The returns are passed on to campus departments and student scholarships and programs, such as graduate student teaching assistantships, Scrivner said. The remaining funds are re-invested.
"We plan to put it back into the principle so it continues to grow," he said.
Donors also dictate where money will be funneled, he added.
"We have little control over how the money gets spent," said Scrivner, who added that about 98.5 percent of the funds spent are restricted by donors.