Last modified: Tuesday, May 18, 2004
Market value of gifts invested for IU leaps to more than $1 billion
NOTE: A chart providing details about the funds' performance over the past 10 years is available online at http://newsinfo.iu.edu/pub/libs/images/usr/321_h.pdf.
BLOOMINGTON, Ind. -- One-year increases that surpassed their benchmarks pushed the market value of gifts invested for Indiana University by the IU Foundation to more than $1 billion. At the close of the third quarter, invested gift funds were valued at $1.010 billion. The record high was $1.045 billion in June 2001.
For the period ending March 31, the Pooled Equity Fund achieved a 45.5 percent one-year return, and the Pooled Fixed Income Fund achieved a 12.6 percent return. The two funds are the components of the Long-Term Pooled Fund in which gifts are invested; the weighted return for the Long-Term Pooled Fund is 38.1 percent.
"We have had our down years, like everyone else, and we have rebounded as others are now doing," said Curt Simic, president of the IU Foundation. "What pleases us even more than the rebound is that we are beating the benchmarks against which we measure ourselves."
The Pooled Equity Fund out-performed its target-weighted index and the S&P 500 over every period measured: one quarter, and one, three, five, seven and 10 years. The Pooled Fixed Income Fund out-performed the Lehman Brothers Aggregate Index during the same periods.
"This success reflects the wisdom of the investment committee of the foundation's board of directors and its long-term asset allocation strategy," Simic said.
The foundation's board of directors approved a change in the asset allocation of invested gift funds from 70 percent equity and 30 percent fixed income to 80 percent equity and 20 percent fixed income in February 2003. "This decision alone has added $25 million in incremental returns in the past year," said Gary Stratten, chief investment officer at the IU Foundation.
"The goal of the foundation's investment program is to maintain -- ideally to increase -- the purchasing power of invested gifts over time," Simic said.
Only a portion of the investment returns -- approximately 5 percent -- is distributed by the foundation and spent by the IU school, department or program that is the beneficiary of the donor's original gift. After fees are paid, the balance is retained in the account so that the principal grows over time. The increases in the value of the principal enable the dollar amount of the 5 percent distribution to increase as well.
"In this way," Simic said, "we keep faith with our donors who want to make a gift that will last forever."
The foundation recognizes a number of contributors to its investment success. "Over a period of years," Stratten said, "the board of directors has systematically diversified the portfolio into small and mid-capitalization stocks and into international stocks, all of which have recently out-paced large-cap domestic stocks. Alternative investments have also begun to contribute nicely to our performance."
The majority of invested gift funds are managed by outside managers, selected and hired by the investment committee of the board of directors. "The managers selected by our board have, by and large, out-performed their benchmarks since receiving their initial assignment from IUF," Stratten said.