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Barbara Coffman
IU Foundation

Last modified: Thursday, October 9, 2003

Total return rate on IU's endowment better than national average in 2003

Indiana University's endowment had a total return rate that was better than the national average for colleges and universities in 2003, IU Foundation officials reported today (Oct. 9). The IU Foundation manages the university's endowment.

The Chronicle of Higher Education recently reported that college and university endowments averaged a total return of 2.9 percent in the 2003 fiscal year. During the same period, IU's endowment had a total return of 3.8 percent, or 0.9 percent above the average.

An annual nationwide study, conducted by the Commonfund Institute, indicated that endowments of U.S. educational institutions have turned the corner since reporting a negative 5.4 percent return in 2002. The IU Foundation's total return rate for 10 years averaged 9.5 percent per year, net of managers' fees.

"The IU Foundation adopted some new strategies in the past year as part of its long-term goal to maintain the purchasing power of the endowment over time. These strategies also helped to counteract the downward pressures the economy had been exerting on endowments generally," said Curt Simic, president of the IU Foundation.

Simic said that strategies adopted by the investment committee of the IU Foundation Board of Directors include:

-- Changing the asset allocation from 70/30 to 80/20 equities/fixed income, which added a net of about $15 million to invested assets.

-- Instituting a cash overlay program, managed by the Clifton Group, which added another $15 million.

-- Staying the course rather than reacting to huge swings in the market. For example, last fall the board retained high-yield fixed income investments even though that sector of the market was performing poorly at the time. That investment has returned several million dollars since October 2002 as the market rebounded.

-- Continuing to build out the alternative investment part of the foundation's portfolio.

"The bottom line," Simic said, "is that donors can have confidence that their gifts for IU are being handled wisely by the IU Foundation."